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Participant ○

10-Year Returns

There is an interesting article in today's NYT by Jeff Sommer about the quirky perspective that even long-term results can provide.  US stocks hit the bottom of the great recession in 3/2009, so from that financial pit the current ten-year returns look misleadingly good.  https://www.nytimes.com/2019/05/09/business/10-year-stock-window.html

An interesting variation on Sommer's theme is provided by TREA's returns.  It hit its bottom a year later than stocks, including REITs, which means that TREA's 10-year returns now look relatively disappointing.  But that is changing fast.  TREA's 10-year annualized return at the end of the first quarter of this year was 5.65%.  Just one month later it was 6.10%.  It will be no  surprise to me if on 3/1/2020 TREA's 10-year return is far better than that of REITs and other US stocks.

John

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Participant ○○

Re: 10-Year Returns

Thanks for that analysis and comment, John.
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Frequent Contributor

Re: 10-Year Returns

10-yr data to 3/31/19 are shown in TIAA March IPS Report. You can save it for keepsake before the April Report is posted.   https://www.tiaa.org/public/pdf/performance/ips_report.pdf

YBB
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Frequent Contributor

Re: 10-Year Returns

Respectfully, is 10 years "long term?"

In a recent Bloomberg column John Authers quotes the following:

"Data mining is the key technique for nearly all stockbroker economics. There is no claim that cannot be supported by statistics, provided that these are carefully selected. For this purpose, data are usually restricted to a limited period, rather than using the full series available. Statistics, it has been observed, will always confess if tortured sufficiently."

Cuidado!

Bob

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Re: 10-Year Returns

3/31/09 was close to historic low. So whether 10-yr returns are long-term or not, a look back from that date is important.

YBB
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Re: 10-Year Returns

Forgive me, Yogi, for not quite grasping your use of "historic."  

I'm sure we both remember when equity averages were far far lower when we were much much younger. That's how I think of "historic."

Bob 

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Re: 10-Year Returns


@GLI2019 wrote:

Forgive me, Yogi, for not quite grasping your use of "historic."  

I'm sure we both remember when equity averages were far far lower when we were much much younger. That's how I think of "historic."

Bob 


Well, you are in argumentative mood today if you don't think that March 2009 lows weren't historic. Sure, indexes were near zero at some ancient historic point.

Some may download/save TIAA March 2019 IPS that I linked, others may not. What is YOUR big fuss on that about?

YBB
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Re: 10-Year Returns

No, Yogi.  I have no desire to be argumentative.

When I reflect on the more than 50 years I have been investing,  that's honestly my sense of "history," in this instance, which pales before the entire data set of market history.

I guess you and I and John have a different sense of context.  This is an observation, not an argument.

Cheers.

Bob

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Contributor ○○○

Re: 10-Year Returns

I would agree looking at a specific time frame can be misleading up or down. Is the entire lifetime a better measure? Anything less than the lifetime is cherry picking.

Does "TREA's" mean Treaury 10 year?

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Re: 10-Year Returns


@Gary1952 wrote:

I would agree looking at a specific time frame can be misleading up or down. Is the entire lifetime a better measure? Anything less than the lifetime is cherry picking.

Does "TREA's" mean Treaury 10 year?


No, T-REA means TIAA Real Estate Account [VA], 1995- .

YBB
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Frequent Contributor

Re: 10-Year Returns

Hi Gary,

TREA is used as an abbreviation for the TIAA Real Estate Account.

Bob

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Participant ○

Re: 10-Year Returns

It's not Cherry Picking to go with standard 1, 3, 5, and 10 year returns. These backward - looking timeframes have been around for a while.

And as we all know, they tell us nothing about what the NEXT 1, 3, or 5 years will be giving us...

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Participant ○

Re: 10-Year Returns

Stock prices in early 2009 were low in comparison to historic averages.  You would have to go back to the mid-80s to find lower prices.

But, Sommer's point is that in looking at returns over any period you have to think about where prices were at the beginning of the period.   We tend to think that looking at 10-year returns is simply looking at long-term returns without stopping to think that it may have been an unusual period.

Nevertheless, I'm looking forward to seeing TREA's 10-year returns early next year!

John

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Re: 10-Year Returns

As Sommers' article implies, the term "period" is itself arbitrary and problematic.

It's the SEC that  requires 1, 5, 10 year returns, but even this can mask quite a lot of turbulence.

Here's a link to missing the best and worst days in the market:

https://www.ifa.com/12steps/step4/missing_the_best_and_worst_days/

Bob

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Explorer ○

Re: 10-Year Returns

2 comments (imhos) on n year annualized returns:

1) when you're drawing they may not mean much

2) they sometimes hide the pain, I think this is along the lines of the op.

 

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Re: 10-Year Returns

As all intelligent investors know all investment performance is relative to period measured and data points used to measure performance. But since investments are made during finite periods when there are assets to invest it is meaningless to compare performance over long terms such as 50 years or more.

I don’t worry about comparing relative performance over one period to another because there is nothing I can do about changing the long term time periods in which I can invest and I don’t believe investors can out perform by market timing.

I do know that long term investing in the markets provides satisfactory results. For example the average annual total return for my investments in TIAA CREF for the 31 years ending Dec 31, 2016 was 9.5%.My  Average annual Total return for Shares of VZ for the 35.25 years since it was spun off from MaBell in 1984 is 9.75%.

Dont expect TREA to out perform REITs. VNQ is up 16.1% in 2019. 10 year return is 14.9%. 20% of the REIT dividends are exempt from income tax and cap gains are taxed at 0 or 15% for the bottom 99% of taxpayers unlike TREA which is taxed at marginal tax rates.

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Re: 10-Year Returns

"Dont expect TREA to out perform REITs. VNQ is up 16.1% in 2019. 10 year return is 14.9%. 20% of the REIT dividends are exempt from income tax and cap gains are taxed at 0 or 15% for the bottom 99% of taxpayers unlike TREA which is taxed at marginal tax rates."

+1

VNQ covers the entire spectrum of real estate, not just one segment of real estate. So, although VNQ will not have a smooth curve, it should outperform TREA over a long term.

Besides, there seem to be some REIT CEFs whose distributions are a lot more than TREA's average returns. If those distributions are reinvested over a long period - say 10 years, the returns (not the principal) will far exceed the accumulation in TREA. My learning curve has been very steep in the past one year.

 

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Re: 10-Year Returns

"Dont expect TREA to out perform REITs."

This should be obvious to anyone who knows the difference between expected returns for equity (e.g., REITS) and participation in a variable annuity that directly owns real estate.  TIAA's literature goes to great lengths to remind potential investors about the difference.

See section H of TREA Faq's: 

H. MISCELLANEOUS

H1. IS THERE A DIFFERENCE BETWEEN INVESTING IN THE REAL ESTATE ACCOUNT AND A REIT (REAL ESTATE INVESTMENT TRUST) FUND

Bob

 

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Re: 10-Year Returns


@ECEPROF wrote:

"Dont expect TREA to out perform REITs. VNQ is up 16.1% in 2019. 10 year return is 14.9%. 20% of the REIT dividends are exempt from income tax and cap gains are taxed at 0 or 15% for the bottom 99% of taxpayers unlike TREA which is taxed at marginal tax rates."

+1

VNQ covers the entire spectrum of real estate, not just one segment of real estate. So, although VNQ will not have a smooth curve, it should outperform TREA over a long term.

Besides, there seem to be some REIT CEFs whose distributions are a lot more than TREA's average returns. If those distributions are reinvested over a long period - say 10 years, the returns (not the principal) will far exceed the accumulation in TREA. My learning curve has been very steep in the past one year.

 


Just read in Kiplinger's Magazine article by Jeffrey Kosnett about CEF's FFC, PFD and PFO and another Seeking Alpha article that 100% of CEF's beat the PFF ETF benchmark. Checking current distributions show that all three CEF's exceed 6.4+% and PFD has a 10 year 16.9% annualized gain.

PS: Nat, you and Intruder mention VNQ. Intruder seems to be a big fan. I looked up VNQ on U.S. News ETF Rankings and VNQ does not even get ranked.  It seems they like Fidelity, iShares even Schwab choices much better. Any thoughts as to why?

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Re: 10-Year Returns


@judger wrote:

@ECEPROF wrote:

"Dont expect TREA to out perform REITs. VNQ is up 16.1% in 2019. 10 year return is 14.9%. 20% of the REIT dividends are exempt from income tax and cap gains are taxed at 0 or 15% for the bottom 99% of taxpayers unlike TREA which is taxed at marginal tax rates."

+1

VNQ covers the entire spectrum of real estate, not just one segment of real estate. So, although VNQ will not have a smooth curve, it should outperform TREA over a long term.

Besides, there seem to be some REIT CEFs whose distributions are a lot more than TREA's average returns. If those distributions are reinvested over a long period - say 10 years, the returns (not the principal) will far exceed the accumulation in TREA. My learning curve has been very steep in the past one year.

 


Just read in Kiplinger's Magazine article by Jeffrey Kosnett about CEF's FFC, PFD and PFO and another Seeking Alpha article that 100% of CEF's beat the PFF ETF benchmark. Checking current distributions show that all three CEF's exceed 6.4+% and PFD has a 10 year 16.9% annualized gain.

PS: Nat, you and Intruder mention VNQ. Intruder seems to be a big fan. I looked up VNQ on U.S. News ETF Rankings and VNQ does not even get ranked.  It seems they like Fidelity, iShares even Schwab choices much better. Any thoughts as to why?


I do not know about REIT funds other than TREA (Every one knows this one) and VNQ. I had invested in VNQ in the past but not now. There is another ETF called MORT. Since we have heavy personal investments  in real estate, we did not need TREA or VNQ. By the way, I have used TREA money for down payments (probably about 100 k) of condos. When I called TIAA Reps on the phone to transfer such large transfers to the bank account, they were interested why I am doing such large transfers. I explained to them why we need such large amounts.

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