ARE - The Science Of Making Money: Why Alexandria Real Estate Is A Buy
2024-04-24 03:14:38 ET
Summary
- The average investor has a poor track record of managing investments, with a return of only 1.9% per year compared to the S&P 500's 5.6%.
- REITs have historically performed well, but are currently struggling, with the Vanguard Real Estate ETF returning only 64% in the past ten years compared to the S&P 500's 219%.
- Office REITs have been hit hard, with high vacancy rates and elevated interest rates, but Alexandria Real Estate Equities stands out as a strong performer due to its focus on healthcare.
Introduction
The other day, I came across the chart below. While I usually don't use old charts - let alone charts that turned five years old earlier this year - there are two interesting findings.
- The average investor is horrible at managing his/her investments. In the 1999-2018 period, the average investor has returned just 1.9% per year. That's below the average annual inflation rate of 2.2%. During this period, the S&P 500 has returned 5.6% per year.
- REITs have been a great place to put money, returning roughly 10% annually. In general, the 1999-2018 period was not bad for hard assets, as gold and oil also outperformed the market.