No. of Recommendations: 14
Warren or Charlie made some remark about "don't keep playing once you've won the game". In the past I have interpreted that to mean keep the money in BRK rather than Saul's board or something with a higher risk/reward. I'm at a point where I an old enough and secure enough that I can comfortably cruise on in a fairly conservative position. My taxable assets remain mostly BRK. My IRA's which are up eight fold since the big meltdown of 2008 are migrating into some high yield bond and preferred stock funds.
There was a great REIT board on the old site, with people who were authorities in the field offering deep analysis. The preferred stocks of REITs are a pretty safe investment as long as the unlaying company is sound. REITS are required to pay out 90% in dividends and the preferred is paid before the common stock. The pfd's I held gave steady returns for years and offered amazing bargains during the financial crisis. Then we went into a long period of low interest rates and the pfd's were redeemed and the replacements were at too low of a return to be worthwhile. The same applied to bonds and money markets, so I dumped even more into BRK.
Last year it looked like a window was open where once again there was a decent return from REIT pfd's and some upside capital gain potential. An example might be UMH-PD, a mobile home REIT with a long history of stable dividends. It was available much of the year at 21.50 with a dividend of 7.5%. It is now trending $23.00 so last year it netted in the 14% range. The window is closing, but the delay in interest rate cuts has kept it cracked and I expect a 2024 return of 6.9% dividend and 3-6% capital gain is not unlikely. PFFR is an ETF of REIT prd's with an attractive rate and reasonable expense ratio. It holds a lot of mortgage REITs which I have never understood well enough to buy, though in a diversified fund I am willing to hold them.
I'm also back in some high yield bonds. I netted 10% on JNK last year and will hold it another year I suppose. I'm not under the illusion these are better than BRK in a downturn, but it isn't unreasonable to think they are no worse than BRK starting at a this lofty price, and they are at least different. The specter of a major stock market pull-back coinciding with the passing of our uncle is a reason to diversify and get a bit defensive.
