The fiscal cliff is still looming large on the horizon, and as a result there is a buying opportunity for dividend investors.
Remember how we talked about the fiscal cliff? Well as the deadline for a deal draws closer and closer, folks start to freak out more and more. Specifically, dividend stocks and REITs in particular have take a beating over the last month or so.
I’ve posted here before about a particular REIT, ARR. Well, here’s a quick snapshot of ARR’s performance over the last 3 months:
As you can see, things were moving along at a normal pace and then in October the stock price started to decline. As the year drew closer to an end and the fiscal cliff became more of a reality, investors started to re-evaluate their portfolios and lots of them exited, or at least significantly reduced, their REIT positions. Another factor weighing heavily on ARR is the potential for future stimulus action by the Fed. If this happens there would probably be a temporary stalling of the credit market for short term debt buyers and that could have a bit of an impact to ARR.
I still believe the future is bright for ARR, though. Analysts are expecting prepayments to decline in early 2013 which should help the profit spread for ARR and similar companies. I tend to agree with that assessment.
I’m simply using ARR as an example. My overall point is that uncertainty creates opportunity. If you really believe in the long-term potential of companies such as ARR, the current environment presents a golden buying opportunity. I’m not talking about market timing – generally, I think trying to time the market is a terrible idea. I’m talking about keeping your long-term investment goals in mind when examining the market landscape and making decisions. If you see an opportunity based on short-term news that aligns with your long-term goals – take it!
Brick By Brick Investing | Marvin on December 6, 2012 at 12:45 pm said:
Great pick up. I love picking up great businesses and cheap prices when people panic!
Martin on December 11, 2012 at 12:31 am said:
ARR has been one of the companies in REITs industry surviving the turmoil of 2008. With economic recovery this company will grow as it did even during recession. I also have it in my portfolio and during the panic selling I was adding more shares. The only bad thing is that although the stock is optionable there is very low interest and volume with its options so you do not want to trade ARR options.