Question

Select and analyze current news article covering calculation and usage of interest rates and discuss your findings. You will be discussing at least ONE news article/video by yourself. Discussion Post Resource List CNN Money: www.money.cnn.com (Links to an external site.)Links to an external site. Yahoo! Finance: www.finance.yahoo.com (Links to an external site.)Links to an external site. Bloomberg Business: www.bloomberg.com (Links to an external site.)Links to an external site. Forbes: www.forbes.com (Links to an external site.)Links to an external site. Seeking Alpha: www.seekingalpha.com (Links to an external site.)Links to an external site. This is Money (UK): ww.thisismoney.co.uk (Links to an external site.)Links to an external site. The Street: www.thestreet.com (Links to an external site.)Links to an external site. MarketWatch: www.marketwatch.com (Links to an external site.)Links to an external site. Harvard Business Reviews: https://hbr.org (Links to an external site.)Links to an external site. Choose a news article or news video from the list of resources provided. You will provide a link to the article or video within your post so that others may view/read the same material as you. Briefly summarize the major aspects of the news item and then take a side; either oppose or support the view of the article(s).

Answer 1

https://www.marketwatch.com/story/reit-prices-push-higher-despite-the-federal-reserves-interest-rate-increases-2018-08-22

REIT prices push higher despite the Federal Reserve’s interest-rate increases

Findings

It is said that there is inverse relationship between rates and prices.

So when interest rates rise, investors fear that income-producing investments such as bonds and real estate investment trusts (REITs) will fall because of the inverse relationship between rates and prices.

But for REITs, the story is different.

Despite rise in the interest rates over past two years from low records, REIT prices did not get disrupted. As shown in the chart, there have been two major declines in REIT prices over the past two years, but prices recovered as the economy continued to grow.

Patience is required during periods of rising rates. The income will continue to flow, as long as the REITs one selects have sufficient cash flow to cover or raise their dividend payouts.

I agree with the view of article as investor needs to do his own research to understand the strategy of any REIT he considers for investment. There may have been an extraordinary event that drove it up or down over the past year.

It’s important to note that REIT share prices aren’t just affected by interest rates but can and do trade on other factors, including a REIT’s fundamentals, long-term growth prospects, and dividend growth history.

The keys to successful long-term REIT investing are to:

1) Know yourself, your personality, time horizon, goals, and risk tolerance.

2) Make a well-thought-out personalized investing plan that meets your needs.

3) Stick to this plan, never investing based on emotions.

4) Do your research. Never buy a REIT until you’ve checked its long-term dividend track record.

5) Buy and hold as long as the dividend is secure and the business is growing.