August 31, 2013 Cruisin'

Risk/Reward Vol. 184

THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.

"Baby, let's cruise away from here
Don't be confused/The way is clear
This is not a one night stand."---lyrics from "Cruisin'" sung by Smokey Robinson and the Miracles

"If you wanna know/The real deal about the three
Let me tell ya we're a triple threat."---lyrics from "Triple Threat" by The Beastie Boys

"You tried to lease my love
Lease my love, lease my love."---lyrics from "Lease My Love" sung by Rihanna

For the first time in weeks, the possible tapering of QE3 by the Federal Reserve has not dominated the stock market. Instead, the market is concerned with "cruisin'" (as in cruise missiles) far "away from here" and for reasons that are "confused" and not exactly "clear." For whatever reason, our President feels the need to take a "stand" in Syria of all places, even if it is only bombing for "one night." None of our allies supports such a move, and the prospect of unilateral action sent the Dow Jones Industrial Average down 200 points for the week.

In times like these, indeed at any and all times, one protection against market turbulence is diversification. And, any diversified portfolio should have exposure to income producing "real" estate. But how does one achieve such exposure if one does not want to bother with the "triple threat" of taxes, maintenance and insurance (TMI)? "If you wanna know", the answer is simple: invest in properties that hold triple net leases; that is, properties where the tenant has to "deal with all three", T,M and I. Better yet, invest in publicly traded real estate investment trusts (REIT's) that own triple net leased properties and get the added benefit of broad exposure and liquidity.

When it comes to triple net "leases my love, leases my love", I love Realty Income Corporation (O) and American Realty Capital Partners (ARCP), two of the largest triple net lease REIT's in the country. Between them, they own over 5000 single tenant buildings throughout the United States. Chances are that when you walk into a Walgreen's, a CVS, a Home Depot, a Firestone facility, an LA Fitness salon or any Dollar store, the building is owned by one of these REIT's (or NNN or WPC). Learn more about this sector by visiting Realty Income's website ( www.realtyincome.com ) which is full of easily understood information. I like Realty's preferred stock, OpF, and ARCP's common, both of which yield over 6.5% annually, paid on a monthly basis.

As we enter the Labor Day weekend, our Rihanna-influenced President remains bound and determined to "Take A Bow" on the international stage. As investors, we can only hope that a Syrian air strike does not cause too much stock market "Disturbia."