Don't Ignore This 'Hard Sell' Asset

The 'Mar-a-Lago man' visits Stansberry Investor Hour... His favorite asset class... Real estate for dummies... Who needs offices... The intersection of real estate and technology... A hard sell...

More from the 'Mar-a-Lago man'...

Last week, I (Corey McLaughlin) told you about a man who built a fortune... lost it... and then built another using insights he has gleaned from a network of multimillionaires and billionaires over the years. He's a close friend and former adviser of President-elect Donald Trump.

I'm talking about Brad Thomas of our corporate affiliate Wide Moat Research.

In our Masters Series essays over the weekend, we shared some of the lessons Brad has learned. And in a new free presentation, Brad shared more of his investing advice, along with the part of the stock market he's most excited about today.

This week on the Stansberry Investor Hour podcast, Dan Ferris and I were also fortunate to speak with Brad. The conversation did not disappoint...

He schooled us on his favorite asset class...

It's one that Trump is intimately familiar with as well: real estate. It's the world's largest asset class and has generated life-changing wealth for many people...

Brad spoke about the areas of real estate today – in a post-pandemic, more remote-work world – that he says present the best investing opportunities...

And he told us in depth about the real estate vehicle he likes the most for individual investors: real estate investment trusts ("REITs"). Brad is the author of the definitive industry book REITs for Dummies. As we mentioned, he also shared more about them over the weekend in our Masters Series.

In short, a REIT is a publicly traded security that owns and, in many cases, operates income-producing real estate. For individual investors, it allows you to have exposure to real estate without owning it yourself or being a landlord.

A selling point...

One of the top selling points for REITs is that they are required by law to pay out at least 90% of their taxable income. But Brad told us some pay out all of it. Of course, that means you want to understand which ones generate the most cash and shareholder return. As Brad said...

The most important thing to consider with REITs (and really any business) is how the company is able to return capital.

That means you need to know what types of buildings are most likely to be filled... and filled by companies that can afford to pay their rent and keep steady income flowing to the real estate operators. That's where Brad comes in. He and his team do the research...

For example, a lot of people believe the blanket statement that 'office space is dead'...

Sure, a certain kind of office real estate isn't as valuable today as it was in, say, January 2020. But as Brad explained to us, there is more nuance to the commercial real estate market than it might seem...

During our talk, he argued against three common concerns about the sector, including property-developer debts becoming due at higher interest rates and the idea that office space is dead. He rattled off a few industries that need office space no matter what, like medical offices. As he told us...

Those are very sustainable business models. Everyone has to go to the doctor, so these doctors are going to show up and they're going to pay rent...

Put to work the right way, profits from rent can be passed on to investors. It's a similar story with life-science research companies, Brad said. These are the companies developing innovative new treatments and therapies in physical laboratories. And there's a REIT in this area that he likes...

You see, the artificial-intelligence boom has a real estate component, specifically with data centers. Brad explained how these data centers are part of his "trifecta approach" to investing in the intersection of real estate and technology.

Brad also shared how much of their portfolio someone may generally want to allocate to REIT investments. Generally, he suggests between 10% and 20% in a diversified set of investments in the sector.

I know buying a "hated" asset class is a hard sell... But that's the point. This is exactly when you're likely to find great value in an investment. That's why Stansberry Research icon Steve Sjuggerud coined the phrase "cheap, hated, and in an uptrend" as a strategy for finding profitable investments over time.

Check out our full interview with Brad...

We started our discussion with Brad's background and how he got interested in real estate investing... how he built a fortune, lost it, and what he did to rebuild it... and how individual investors can use his lessons to grow their own portfolio...

That goes for real estate, but also stocks in various industries. Brad has recommended nearly two dozen stock winners that could have returned at least triple-digit gains over the years, and several that rose more than 1,000%.

Right now, with most stocks trading at historically high valuations, Brad has his eyes on an overlooked group of stocks that he says represents "the most wildly asymmetrical market opportunity today." He also has some thoughts about which parts of the market are due to benefit from the incoming Trump administration.

You can watch our full interview on YouTube here. You can also listen to the audio version wherever you listen to podcasts, like Spotify or iTunes, or at InvestorHour.com, where you can sign up to get a link each time a new episode goes live, usually on Monday evenings.

And if you're interested in hearing more from Brad, check out his new free presentation for much more about his story, his work, and how to access it at our corporate affiliate Wide Moat Research.

New 52-week highs (as of 12/9/24): AutoZone (AZO), Alpha Architect 1-3 Month Box Fund (BOXX), PayPal (PYPL), United States Commodity Index Fund (USCI), and Westlake Chemical Partners (WLKP).

In today's mailbag, feedback on Dan Ferris' latest Friday essay... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Hi Dan, thank you as always for sharing your wit and wisdom about the recent high valuations and tempering the current round of irrational exuberance engulfing the market. As a Stansberry Research subscriber, I lived through the joys and agony of not listening to your commentary and saw a high percentage of my returns vanish. I'm at a similar point where my returns have recouped my losses and then some but worry about the future..." – Subscriber Chris G.

All the best,

Corey McLaughlin
Baltimore, Maryland
December 10, 2024

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