Never Forget: Cash Is King

I made a mistake.

You can mark today, January 12th, as the day I acknowledged my first 2023-specific mistake made here on Seeking Alpha. Though, technically, I made the mistake right off the bat.

Like on New Year’s Day.

So there’s that.

It was in the article “5 REIT Resolutions for 2023,” where I listed the following goals for this new trip around the sun:

1. Reduce leverage.
2. Avoid sucker yields.
3. Maintain sound diversification.
4. Make my wife happy.
5. Stay humble.

All of those were good – even great! – resolutions, if I do say so myself. And to those who would point out that some (or all) of them sound familiar…

So what? Stick with the classics, I say! They’re classic for a reason.

That’s not where my mistake was. My mistake was in writing only five real estate investment trust (“REIT”) resolutions for the year. I should have written six, with the last one looking like this:

Never forget that cash is king.

REITs Were Not Happy In 2020

For those of you who recognize the phrase – and how I built a portfolio around the concept after the 2020 shutdowns sent REITs into a pricing abyss – fear not. I’m not predicting another crash-and-burn session like we had back then.

Ultimately, who knows, of course. Anything goes in the 2020s! On the flipside, we might not even see a recession when the labor market is raging the way it is.

However, I’m pretty sure that’s around the bend. In which case, we want to limit our risk even more than usual by investing in quality companies that are prepared to handle less-than-stellar business conditions.

As I wrote in my 2020 “Cash Is King” article:

“I know you’ve heard that the No. 1 rule in real estate is ‘location, location, location.’ And perhaps it deserves that placement.

“But a very close second, at least when it comes to REITs, is ‘cash is king.’ In fact, you could even say that rule No. 1 doesn’t work long-term if it doesn’t automatically align itself with rule No. 2.”

At the time, I know I had a…