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I have some REIT stocks in my IRA. One of them just announced 2 weeks ago a normal dividend while their price was stable. Within that time, it dropped 75%, then they announced they "can't cover their margins", their stock is now worth pennies. How does that happen? Why does it appear fine and 9 trading days later it's worthless. There seems to be something about the REIT industry I'm missing as it's happening all over.

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    Does this answer your question? Any ideas why REITS seem to be headed to zero?
    – glibdud
    Mar 24, 2020 at 20:04
  • I wish I saw that yesterday!
    – rtaft
    Mar 24, 2020 at 20:21
  • Was the fund previously making yearly dividend payments totaling around 10%? That level of return is indicative of a fairly high level of risk considering the risk-free rate of return was somewhere around 2%. It's clearly higher than the overall stock market since the overall stock market doesn't return 10%. Mar 25, 2020 at 23:42
  • @DavidSchwartz 2% is a horrible return. If the markets average return is 7%, taking into consideration that an REIT does not pay taxes and the income the stockholder makes is taxed as income tax, it makes sense that it would have a higher return than the market, and great for retirement accounts that are not taxed.
    – rtaft
    Mar 26, 2020 at 17:02
  • @rtaft You are very, very wrong. 2% is a great return if you can't accept any risk. With treasuries going negative, many investors would gladly take a 2% risk-free return. You can't even find that these days. So 10% would necessarily mean quite a bit of risk. (If you disagree, please tell me where I can find a 2% risk-free return.) Mar 26, 2020 at 17:07

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