Feel like shorting REITs

[valuenewb]

During Jun-07, the Average Yield (all REITs) = 4.249% vs Now = 6.465%.

As well, the benchmark 10-yr SGS was 2 to 3% then vs Now ~1.4%.
So yield spread over virtual risk free was ~2% vs Now ~5%

[Image: yieldcurve_10yr.gif]

Isn't this exactly the reason why one shouldn't short REITS?

It's all about opportunity costs. With all the QEs and all the elections coming, the market will be flooded with money looking for returns. The spread over RF is still 5%, which suggests that it's not about to reach the end yet.

Second, all the dilutive rights that happened in 08/09/GFC resulted from less than solid foundation (CMBS, high leverage).

Can that happen again? Yes, certainly.
Is it likely to happen again? Low chance of it as they have learnt their lessons and have spaced out the maturity of their debt into the future.

Don't get me wrong. I was never into REITS and still not into REITS. I might have missed the boat but I certainly won't want to try to sink them/shoot them down.