Checking on 3 Top Office REITs

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Office REITs are one of the worst affected areas within the REITs space. Residential and Warehouse REITs have soared since the Covid-19 era. But office REITs plunged dramatically as most offices shut down and then when normality started to return, work from home options killed the office REITs. Unlike in the past companies are not leasing big office spaces and existing leases are also renewed with reduced spaces. It may take many years before office REITs retain their former power and growth.

The following chart shows the 5-year return of 3 major office REITs:

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The chart below shows the YTD returns:

Source: Yahoo Finance

Vornado(VNO) is a major player in markets across the country and owns multiple famous properties in New York. Before Covid the company used to a solid dividend payer and was the stock performed well each year as well. However all that changed when Covid hit and the company is still struggling. The firm paid dividend earlier this year but has suspended payments for the rest of the year hi-lighting the difficulties facing this part of the REITs sector. From a high of about $72 a share in 2019, the stock closed under $20 yesterday.

Long-term investors are nursing huge losses with no end in sight for recovery.

Referenced stocks:

Boston Properties Inc (BXP)

Vornado Realty Trust (VNO)

SL Green Realty Corp (SLG)

Disclosure: No positions

Time it Takes to Double Money: Chart

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I came across the below interesting chart showing how long it takes to double your money based on rate of return. At 5% it takes just over 14 years to double your money. The S&P 500 has returned an average annual return of 11.5% since 1928 to thru last year. However since it is an average and over such a long period it is highly unlikely most retail investors would generate that rate of return. However even if we assume the rate is 5% it is not bad to double one’s money in 14 years.

Click to enlarge

Source:  Market Index

Related ETFs:

  • SPDR S&P 500 ETF (SPY)
  • iShares Core S&P 500 ETF (IVV)
  • Vanguard S&P 500 ETF (VOO)
  • SPDR Gold Trust ETF (GLD)
  • Vanguard Total Bond Market ETF (BND)
  • iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Disclosure: No positions

Why You Shouldn’t in an IPO: Vinfast Auto Example

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Investing in an IPO is never a smart idea for retail investors. Way too many IPOs never seem to live up to the hype. Most of them end up losers for investors with some crashing big even within a few weeks or months of going public. The latest example of one such IPO is the Vietnam-based EV maker VinFast Auto Ltd (VFS). VinFast listed on the NASDAQ thru a blank check company on August 14, 2023 with a listing price of $22 a share valuing the firm at $23.0 billion.

In just over a week the stock soared more than 250% giving the company a market value of $85.0 billion. This is shocking indeed as the firm was valued at more than established firms like Ford, Volkswagen and others.

After reaching a peak over $82 in late August the stocks closed at $5.94 on Friday which is nearly one-fourth of the IPO price:

Click to enlarge

Source: Google Finance

The rise and dramatic collapse of VinFast is a classic case of why retail investors should avoid IPOs. Successful IPOs like Alphabet (GOOGL) that made made investors money are rare and finding them is like searching a needle in a haystack.
The key takeaway is that investors should avoid IPOs and instead focus on well established high-quality companies.

Disclosure: No Positions

Quick Notes on the ‘Magnificent Seven’ in the S&P 500

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The S&P 500 is up by a 13.51% year-to-date. Though it has come down a bit from the peak in summer it is still a decent return. However a substantial portion of the returns have come from the top 7 stocks in the next dubbed as the ‘Magnificent Seven’. These are Apple(AAPL), Amazon(AMZN), Microsoft(MSFT), Alphabet (GOOGL). Tesla(TSLA), Meta Platforms Inc (META) and  NVIDIA Corp (NVDA). All except Meta and Tesla have market capitalization in excess of $1.0 Trillion with Apple topping at $2.76T. The growth of these firms in the past few years have been astonishing to say the least. With that said, the YTD and 5-year returns of these stocks are shown below.

Year-to-date Returns:

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5-Year Returns:

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Source: Yahoo Finance

Some of these hi-fliers have nose-bleed valuations. For instance, the Forward P/E of NVDA is 41.49 while on TTM basis it is 108. In addition, NVDA has common shares outstanding of over 2.4 billion. Not to be outdone, social media darling Facebook (aka Meta) has outstanding shares of 2.6 billion. Apple has over 15.0 billion shares outstanding.

These tech stocks have not only survived but thrived even during these times of high interest rates and inflation. It remains to be see if they can maintain their upward growth trajectory the reminder of this year and beyond.

Disclosure: No positions

The 2023 US Morningstar Andex Chart

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The Morningstar Andex chart for the US equity market is one powerful one-page that packs a ton of information for investors. The chart shows the growth of $1 from 1926 to 2022 in various asset classes. It also other useful information such as economic expansions and contractions, S&P P/E, inflation and interest rates, geo-political events, etc.

Over the time period shown in the chart US small cap stocks were the best with an average annual return of 11.8% while large caps returned 10.1%. It should be noted however that it is unlikely there is some investor that held their investments all the way from 1926 till 2022.

Source: Morningstar

Note: You can view the 2023 chart at the Morningstar directly by clicking here.