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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (32650)	9/18/1998 5:36:00 PM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Dave, With Reits, I don't think you can generalize. They are all so different and you have to have an idea on the specific properties. That caveat in place, I think we are near a multi-decade low in rates and that is generally not the time to buy REITs. Add to that the fact that we have already seen huge real estate inflation while tax rates are about as benevolent as they are going to get, and I think you have a recipe for disaster. I like well-managed Reits when they can buy producing properties at a deep discount to replacement cost. That has not been true for the past couple of years. The easy money from Greenspan recklessly lowering rates and expanding credit is either over or near closing time. Apres that, le deluge. Starwood (I almost typed in Starbucks <G>) was a legal tax scam, pure and simple. Congress first threatened to take away the tax advantage of the co., which is where I bought my first puts, and then they actually did it. Yet, the stock remained priced at an exalted level, as though 36% of the eps were not going to disappear overnight. Even after the slide from the 50s to the high 20s, the stock is priced at 20 times the old, tax-advantaged eps, and we won't see growth from that base level for years, if ever. In addition to the actual tax problem, management has done everything possible to lull shareholders to sleep about the disaster while they lightened their own holdings. The term sleazy pops into my head, immediately, but I wouldn't say that sort of thing. <G> I have sold my last third of HOT puts and am no longer in the issue. But should it recover to the 40s in the next year, I will pop it again. This one really shouldn't bounce back the way a Micron does, but in this crazy market, you never know. I hope your father didn't own HOT. Or, if he did, that he sold it at the top. It was a pleasant ride up for awhile, but, IMHO, that ship has left port and hit an iceberg. MB