Shares of the Ultrashort Real Estate ETF (NYSE: SRS) are out
of synch with the perception that a commercial real estate
crash is coming.
Chart Courtesy of StockCharts.com
It seems like a no brainer, commercial real estate is in
trouble. Increasing numbers of commercial mortgages are under
water, a trillion dollars worth of commercial mortgages are
about to reset, and demand for space is falling, with lots
of empty strip malls dotting the landscape.
Yet, SRS, which shorts real estate investment trusts is near its 52 week lows.
That makes no sense. This ETF, theoretically, should be making 52 week highs.
That means that several things are possible. One is that investors don't believe
that a crash is coming, even though the data suggests that it should already
be well on its way to happening.
Another is that the ETF isn't set up right, and that it's not attracting enough
money from investors to actually reflect the investment style that it's supposed
to represent.
No matter what, this is a huge disconnect that is worth watching. This would
be especially meaningful if the action in this ETF starts to reverse in the next
few weeks.
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