Page 15 - IreitEbook

Now, REITs are hardly a perfect investment. Going back to what Templeton both

practiced and preached, nothing ever has been a perfect investment, nothing is

right now, and nothing ever will be.

Remember all that talk about “too big to fail” we heard back in the day?

Hopefully, we’ve learned our lesson since then. Any man-made entity can fail...

with no exceptions, substitutions, or get-out-of-jail free cards to be had.

With that established, let’s face the facts and look at how REITs performed in

the already slowing market of 2007 and the utter chaos of 2008.

An overall picture does show that they significantly underperformed in

2007, offering intense warning signs about the economy that most everyone

somehow managed to ignore. Then, in 2008, they were neither the worst

performer nor the best, dropping 37.3% on average compared to the Nasdaq’s

40% plunge and the Dow’s more “decent” 31.9% fall from grace.

But come 2009, only the Nasdaq did better. And REITs were the clear reigning

champs between 2010 and 2012.

For further proof that REITs can be an integral aspect of a healthy portfolio,

look no further than a 30-year chart comparing them to the major U.S. indexes.

When you do, you’ll see almost instant proof that they provide a whole new

profitable approach to diversification.

Of course, you shouldn’t just go out and buy up shares of any old REIT. Investors

are always – always! – encouraged to do their due diligence. And there are

certain REIT categories that are indeed less long-term advisable than others. So

don’t rush headlong into anything just yet. We’ve still got more to cover first…