The Most Hated Sector of the Past Three Years Strikes Back By Sean Michael Cummings, analyst, True Wealth In 2022, office real estate was one of the biggest financial bogeymen in America... At the time, the global supply chain was reeling, and COVID-19 lockdowns were still a recent memory. But maybe nothing scared the financial world as much as the coming office-market collapse. Following the pandemic, traders pressed their bets against office real estate for two reasons. First, the Federal Reserve raised rates to try to cool soaring inflation. This put office buildings in a squeeze as upkeep costs soared. Office demand slumped as rates rose... and the office sector tumbled as a result. Worse still, the work-from-home transition was making office space obsolete. According to Gallup, only 2 in 10 U.S. employees were working fully on-site by June 2022. But contrary to what you may think, the office sector is coming back off the ropes today. And it's hiding a major setup for investors. Let me explain... | Recommended Links: | | How Steve Collected Nearly $118,000 in Extra Stock Market Income A 73-year-old reader named Steve recently wrote us a thank-you note about how ONE income strategy completely transformed the way he looks at retirement. "We're no longer worrying about bills," he said. So far, he has collected nearly $118,000 in extra income. And he tells us that he and his wife haven't had to touch their nest egg. Just about anybody can learn to do this. Click here to see how. | |
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We always want to pay attention when an asset goes from "bad" to "less bad." That's when some of the best opportunities to profit appear... Say an asset is flying high but gets some bad news that knocks prices off their peak. Then more unwelcome news comes out, depressing prices further... Eventually, the asset enters a full-on bear market. Sentiment grows so sour that no one wants to own the asset, and prices plummet. But then a bit of good news comes out about the asset class. So things start looking "less bad," and bidders start to appear. An uptrend takes shape. And once speculators start chasing this uptrend, a new bull market begins. By buying sentiment washouts, you ride the wave all the way back up as the outlook improves. Today's office market is a great example of this process. As the pandemic eased, financial media became obsessed with bad news about the American office market. It was impossible to miss headlines like this one from Fortune...
And here's another from Forbes:
The financial media forecast a major crisis spurred along by office markets. But today, there's much less chatter about the "office apocalypse." The sentiment washout has run its course... We can see this using Google Trends data. This data shows how much Google users search for a keyword or phrase at a given time. Take a look at how the term "real estate crash" has fared in recent years...
There was a huge spike in anxiety over a real estate crash in 2022. But today, the negative sentiment has ebbed. At the same time, office demand is growing. According to the Wall Street Journal, office leasing leaped to nearly a three-year high last quarter. In short, the office market is staging one of the stealthiest comebacks in the market today. Everyone expected an "apocalypse" driven by office markets. But today, folks have simply forgotten about the sector. That's creating a classic "bad to less bad" setup... And with leasing demand on the rise, there's a great setup for investors to profit. Don't miss this opportunity in the real estate sector. Consider adding office exposure to your portfolio today. Good investing, Sean Michael Cummings Further Reading The current bull market is rife with reasons to doubt it. But stocks have continued to soar for two years now. So until things do start to go wrong in the market, it's wise to assume the best, especially if you have these safeguards in place... Learn more here. Sentiment in a different sector of the market is starting to shift now as well. Investors have been souring on this commodity since 2018. But one indicator just flashed a bullish breakout. And history shows that could mean a double or more from here... Read more here. |
Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK PNC Financial Services (PNC)... financial services
Reinsurance Group of America (RGA)... reinsurance
Cisco Systems (CSCO)... networking tech
Sea Limited (SE)... Singaporean tech giant
Autodesk (ADSK)... software and 3D modeling
Live Nation Entertainment (LYV)... live events
Fox (FOX)... mass media
DoorDash (DASH)... food-delivery app
Simon Property Group (SPG)... shopping centers
Honeywell (HON)... manufacturing
Johnson Controls (JCI)... industrial equipment
Kinder Morgan (KMI)... oil and gas
Enterprise Products Partners (EPD)... oil and gas
L3Harris Technologies (LHX)... defense contractor NEW LOWS OF NOTE LAST WEEK Biogen (BIIB)... biotechnology
Moderna (MRNA)... biotechnology
STMicroelectronics (STM)... chipmaker Tell us what you think of this content
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