Just over a thousand kilometers southeast of London sit the mountainous, chilled vistas of Davos, Switzerland. And while I’ve never skied there, I’ve enjoyed invitations to the major economic gatherings in that beautiful, small, yet cosmopolitan town in the Alps.
The name Davos also helps me illustrate an important aspect of Real Estate Investment Trusts, as I cover the REIT investing landscape from here in South Carolina (U.S.). DAVOS as an acronym helps me narrow down the world of REITs into an index, to make a point.
You’re likely familiar with “FANG,” the acronym popularized by TV business personality Jim Cramer. FANG represents the tech-heavy giants Facebook, Amazon, Netflix, and Google. Since FANG’s creation, Apple has been added (now literally FAANG) – showcasing these voracious, forward-thinking, post-industrial heavyweights of the new future.
My REIT radar kept showing me a similarly tight collection of heavy hitters, so I sought something equally memorable but less fierce than FANG – and a bit more pleasant. I invented D.A.V.O.S. – standing for: Digital Realty Trust (DLR), American Tower Corp. (AMT), Ventas, Inc. (VTR), Realty Income (O), and Simon Property Group (SPG).
Different than a portfolio, this DAVOS index is made from arguably the most popular REITs on the planet, and is designed to help investors make sense of the REIT marketplace.
Popularity contest? Indeed – that’s how Mr. Market behaves, with stock prices changing rapidly, based on the environment, while the underlying value doesn’t change.
Warren Buffett famously said, “In the short term the market is a popularity contest; in the long term it is a weighing machine.” Meaning: investors shouldn’t be concerned with the supply and demand intricacies of the stock market.