Categorized | Education

Being Played the Fool by an Overvalued U.S. Stock Market?

Recent comments by Fed chief Janet Yellen have many wondering about stock valuations and whether or not there’s still room for more on the upside.

But are stocks overvalued? Yellen caused quite a stir recently when she said that stock valuations were “generally quite high.” She has reason to say so. The Dow Jones Industrial Average and the Standard & Poor’s 500 have set all-time highs, while the Nasdaq Composite has flirted with record closes during the past few months.

It’s too soon to tell whether stocks are overvalued, but investors are always vulnerable when they have “all their money stuffed in the same mattress.” Even if that “mattress” is the stock market. There is a reason diversify is the battle cry of many financial analysts.

But what other options are out there?

That’s where Real Estate Investment Trusts, or REITs, come in. A REIT is a company that manages a portfolio of commercial real estate to earn potential profits for shareholders who invest in the company. A REIT may receive special tax considerations if they pay out at least 90% of their net income to their investors. REITs may be publicly traded or what is called a Non-traded REIT. Each type has its own benefits and risks, so it is important to understand the different structures, fees, and risks.

REITs have the potential to be a solution for the savvy, sophisticated investor. Not only can REITs provide possible tax benefits, but they can potentially add diversification to a portfolio. Because REITs are considered an alternative investment, they historically have not been correlated to traditional investments such as stocks and bonds. This allows investment and exposure to the Real Estate sector while removing the “landlord headaches” of actually owning real estate property.

Want to learn more about REITs, diversifying your portfolio, and not being so tied to the stock market? Attend our July 23rd Workshop. For more information, call 865-690-0049 or visit

Swofford Financial
251 N. Peters Road
Knoxville, TN 37923

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