Something's bothering me about this market and it's best illustrated by the real estate investment trust industry, an industry that's outperformed every single investment group for years and years.
Last night on "Mad Money" I went over the analysis Tim Collins gave about how the group could be rolling over, with only one chart out of a half-dozen that is positive.
For me it was poignant because I had just interviewed Prologis (PLD) CEO Hamid Moghadam the other night and he told a terrific story about how rents were going up pretty much everywhere for his industrial building portfolio, the largest in the world, and that he was now starting to build new space because of demand. That, and the fact that money is cheap for those well capitalized, told me that this stock could have more room to run.
But there are two problems. The stock's up 22% already and it yields only 3.2%. So you are paying up and you are getting a subpar yield.
I don't want to buy a REIT with so little yield in an environment where a company has more than 25% European exposure and hasn't corrected.
Plus, the iShares Dow Jones Real Estate ETF (IYR) is now so powerful it could pull down a strong PLD, which makes it even more problematic.
But that's really the story here for so many stocks. They have run. They are up because they have delivered good earnings, but at the same time the future may not be as good as the recent past and they have gone well past their yield protection.
To me that means the risk/reward just isn't there yet.
It's discouraging because I wonder if stocks like PLD have just played out their string by now and other, more defensive stocks are a better place to be.
Random musings: Don't look now but Columnist Conversation is back. The original to-and-fro blog has been resurrected and can now return to the place where actionable ideas live!