Gavekal Capital: US Residential REITS Locked in Persistent Downtrend

Friday, November 22, 2013

US Residential REITS Locked in Persistent Downtrend

Over the last year, as taper concerns have flared, US residential REITS have struggled. As a group they have underperformed the MSCI World index by 24% on average. The chart below shows the relative performance.

All four stocks look like they are locked in persistent downtrends. Ignat's rule states that a portfolio full of underperforming stocks is likely to underperform. The best way to confront this truth is to avoid stocks that are underperforming...especially those locked in persistent downtrends.

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Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
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