Sell in May and go away?

by

Reits gave been rallying since the start of the year and it may be time to sell some Reits.

Below is a chart of Price/NAV over 1 year of the Reits Index.

The 4 horizontal lines are the standard deviation lines.

  • top red line is +2 standard deviation : 95% of the data within +2 standard deviation
  • top orange line is +1 standard deviation : 68% of the data within +1 standard deviation
  • bottom white line is -1 standard deviation : 68% of the data within -1 standard deviation
  • bottom yellow line is -2 standard deviation : 95% of the data within -2 standard deviation

The P/Nav (green) is high and is at the +2 standard deviation area. This chart seems to indicate that it is not time to buy more Reits, but to take some profits of my Reits holdings. Furthermore most Reits also have XDed.

In case the market falls, I may be able to buy back these same Reits. Of course the risk is that if the market continues to rise and I may have no chance to buy back.

When will I buy Reits again? When the P/Nav line (green) comes back down below the -1 standard deviation line (white).

The above is only a guide that I use to navigate the market trying to buy low and sell high. There is no special indicator that works all the time.

  • I'm a remisier with Maybank Securities, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please open a trading account to become my client; It's free!