Utilities are down today because of First Energy. Commercial Real Estate has rallied because of a short squeeze and possible bailout. If GM can only get a bridge loan, I am going to say that the components of IYR are not going to be bailed out and come the first of the year begin their sell off once again. Of course, looking for ways to reduce risk, I am going to say that utilities offer better relative value because of the inherent demand of its product and the expected growth of energy demand.
Lets say there is a bailout. Do you honestly believe Commercial REITs would be able to payout dividends? That is the whole point of owning them. Maybe they won't go out of business but that doesn't imply a rally to their previous highs either.
And judging by the 3 month chart, Utilities have held their own in the sell off and rally, while IYR has been digesting its massive sell off.
Though I want instant gratification, this pare trade may take awhile, and I have been sniffing around seeing if anyone has been mentioning this type of trade and cannot find one. So does that mean its wrong, or nouveau?
Posts
No comments:
Post a Comment