Is UK property about to rise?
Those of you who follow my videos will have seen the difficulties that I have had attempting to trend-trade the TR Property Investment Trust (TRY) You will see on the graph below that it has been moving sideways over the past year, criss-crossing the moving average of the past year (ma 52) in recent months. 
The problem with this is that it creates false signals for me, using my simple trend-following technique. Why might this be so?
Well, one of the issues is that TRY has a portfolio of both UK and European properties and REITs in it’s portfolio. This has the effect of turning the investment trust into a somewhat ‘hedged’ fund. In other words, it hopes to do well if UK property does well, and also to do well if continental Europe does well. This is fine for the ‘buy and hold’ investors, where diversification brings an amount of safety. However, for a trend-follower this may not be a good thing, because the mix of good and bad in the investment will tend to make the price ‘return to the mean’, ie: cross the moving average more frequently than I would wish. Look at how frequently the price the iShares European property IPRP) has crossed the 52 ma:
This is a nightmare for a trend-trader because there are too many false positives. In other words, the price crosses the 52ma, generating a 'buy' signal, but then the price does not trend upwards, and drops down below the 52 ma again, creating a 'sell' signal and a generating a financial loss. It may be preferable for me to follow a property fund that has more ‘trendiness’ and is exposed to a single geographical area. This may help me to be more confident, when I get a signal, to buy or sell the investment. The iShares ETF of UK property (IUKP) has had a ‘sell’ signal on it since November of 2015.
However, its’ price is rising, and if it generates a ‘buy’ signal, I am tempted to go with this ETF rather than invest in TRY when/if TRY generates a ‘buy’ signal soon.
The point that I am making here about property investing is also true, of course for all of the asset classes, a trending market is what will make my trading profitable, and diversification within a single investment may well be the antichrist for a trend-trader. I have noted the rises of both Workspace Group and Land Securities Group in recent weeks, with both of them triggering ‘buy’ signals using my analysis. Is UK Property on the rise? Only time will tell, of course!
I have a video here that reviews the different asset classes and whether or not I want to be invested in them….
The problem with this is that it creates false signals for me, using my simple trend-following technique. Why might this be so?Well, one of the issues is that TRY has a portfolio of both UK and European properties and REITs in it’s portfolio. This has the effect of turning the investment trust into a somewhat ‘hedged’ fund. In other words, it hopes to do well if UK property does well, and also to do well if continental Europe does well. This is fine for the ‘buy and hold’ investors, where diversification brings an amount of safety. However, for a trend-follower this may not be a good thing, because the mix of good and bad in the investment will tend to make the price ‘return to the mean’, ie: cross the moving average more frequently than I would wish. Look at how frequently the price the iShares European property IPRP) has crossed the 52 ma:
This is a nightmare for a trend-trader because there are too many false positives. In other words, the price crosses the 52ma, generating a 'buy' signal, but then the price does not trend upwards, and drops down below the 52 ma again, creating a 'sell' signal and a generating a financial loss. It may be preferable for me to follow a property fund that has more ‘trendiness’ and is exposed to a single geographical area. This may help me to be more confident, when I get a signal, to buy or sell the investment. The iShares ETF of UK property (IUKP) has had a ‘sell’ signal on it since November of 2015.
However, its’ price is rising, and if it generates a ‘buy’ signal, I am tempted to go with this ETF rather than invest in TRY when/if TRY generates a ‘buy’ signal soon.
The point that I am making here about property investing is also true, of course for all of the asset classes, a trending market is what will make my trading profitable, and diversification within a single investment may well be the antichrist for a trend-trader. I have noted the rises of both Workspace Group and Land Securities Group in recent weeks, with both of them triggering ‘buy’ signals using my analysis. Is UK Property on the rise? Only time will tell, of course!
I have a video here that reviews the different asset classes and whether or not I want to be invested in them….
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