By Investment U
When gold was at $1,900 an ounce, demand was so great they couldn’t get it out of the ground fast enough. But let it drop $500 or $600 an ounce and you can’t give it away.
John Hathaway of Tocqueville Funds called the selloff in gold a contrarian’s dream. All of the fundamentals that drove gold up in price are still in place… skepticism of fiat currencies, negative interest rates, worldwide QE, and the newest driver, governments confiscating money from bank deposits.
Our own government is printing $89 billion a month to try to devalue the dollar and they are criticizing Japan’s efforts to do the same thing to their currency.
According to Barron’s, the current sell-off is a baby and bath water scenario. There is a general liquidation of all commodities and gold is caught in the flow.
Remember, the rush to gold was in response to the abuse of paper money by governments. Nothing has changed. If anything, the abuses have gotten worse.
Gold may indeed be in a bear market, but for contrarians and gold bugs, this is like Christmas in April.
[My colleague Jeff Yastine just broke the story on what’s going on with global currencies and where gold is going from here. For his eye-opening report, click here.]
Too Good to be True?
Next up triple net leasing…
Rental real estate is very hot and has gotten pricey lately, but one of the safest and highest paying ways to play the rental market, triple net leasing, is still pretty much under everyone’s radar.
Triple net leasing sounds almost too good to be true. An investor buys or builds a property, sets up a long-term lease, 25 years is the average, leases to companies like Walgreens (NYSE: WAG) or CVS (NYSE: CVS) and builds in automatic rent increases in the deal. The investor still owns the property after the lease ends and the renters pay all the taxes, maintenance and utilities.
That’s a good deal. And these are paying returns of 6% to 9%.
Here comes the bad news. The cost of these properties runs in the millions, each. Most people don’t have the cash to get in on this kind of deal.
The one exception, though, is if you have a sale of an investment property. Triple nets qualify for 1031 Exchanges to avoid the capital gains on the proceeds of the sale of property.
But, barring winning the lottery and the occasional sale of property, the best way for the average guy to benefit from this kind of deal is with a mutual fund or REIT that focuses on them.
National Retail Properties (NNN:NYSE), formerly called Commercial Net Lease Realty, does exactly that. It has operated out of Orlando, Florida since the early 80’s and buys and build triple net lease deals.
They are a REIT that pays around 4.3% annually. They show slow, but steady growth and are expected to post gains in revenues and earnings next year.
This is not the fast track by any means, but 25- year leases and all of the expenses paid by the store is a sweet deal. And 4.3% in this market is nothing to sneeze at.
National Retail Properties… take a look at this one.
Slap in the Face Award: Wild and Crazy Predictions
Since this market has just entered the “crazy” valuation phase, the airwaves are full of people predicting higher highs in the market. I thought it would be fun to look back at other predictions from past bull markets.
Back in the hot days of the 80’s and 90’s here’s what the big money brains were thinking.
Investor ‘s Business Daily predicted the Dow would be at 49,200 by 2013. Off by just a hair!
The chief strategist at Seligman called for 100,000 on the Dow by 2020. That’s just seven years away. Where’s my checkbook? I have to get in on this one.
And Yale economist, Roger Ibbotson called for 120,400 by 2025. He is also the person who in the 80’s called for 10,000 on the Dow by 1999, so we should take him a little more seriously. 120,400?
Market Watch listed the prediction error rate by financial analysts at 48.7%.
If you were wrong almost half of the time, would you still have a job?
Good Investing,
Steve
Article By Investment U
Original Article: A Fresh (and Easy) Way to Play the Rental Market
