Have you read Lance Armstrong’s book “It’s Not About the Bike?”Me neither. But I’m guessing it’s not about the bike.
Hold on. Don’t leave. Big news.
This week the S&P 500 split off real estate companies from the rest of the financial sector. The financial sector includes insurance companies, banks, and other financial companies.
But this post isn’t about real estate companies getting their own sector within the S&P 500 index. It’s about something else.
Knowing where you fit
Twitter recently switched their category in the app store from “social media” to “news.”
Zuckerberg has made it clear lately that Facebook is a technology company, not a media company.
I am not a financial “comedian.” I create content about money topics that is sometimes funny.
By switching from social media to the news category, Twitter boosted their visibility in the app store.
By Facebook calling themselves a tech company vs. a media company, their stock trades at a tech company price vs. a media company price.
By me staying out of the comedy category and staying in the money category, it’s easier for me to be funnier than my peers because you finance people are pretty much not funny.
What just happened to real estate?
If you’re investing in a stock fund that mirrors the S&P 500 and look at the 10 underlying sectors in the index (11 now with real estate), the stock of real estate companies is buried under the “financial” sector.
But 129 real estate investment trusts have raised $38 billion since 2001, so, it’s finally time for real estate to put their big-girl underwear on and get their own sector. Who cares?
Real estate fund managers.
Using this Vanguard real estate fund as an example, the real estate sector delivered a 6% annualized return over the last 10 years.
If I’m some sort of real estate fund that was somehow using the financial sector as my benchmark, I’m now stabbing myself in the eyeballs. Yes, most real estate fund managers do use some sort of real estate index as their benchmark, but some sneak by under the financial category.
But now it’s absolutely no longer justifiable to use financials as a benchmark for real estate! And now some real estate fund managers have to switch and compare their historical performance to a category/benchmark that has actually made money over the last 10 years!
Pick a category that makes you look goooooood
I could care less about this real estate sector news. The conversations of how the categories we’re in can really make or break how people perceive us is way more interesting to me. Like this news about the CEO viewing Snapchat as a camera company, not a social media app. This is a deliberate choice between e-commerece or being a social media platform that relies on ads for revenue. Hmmmmmmm.