By Jack Sirard -- Bee Staff Writer
Q: The real estate market has been on fire, and REITs have been a fairly good addition to anyone's portfolio. Yet there has been a lot of talk about a real estate bubble, similar to the tech bubble of the 1990s.If there is a bubble and it's due to burst in the next year or so, is there a way to short real estate? - Hank D., Sacramento
A: You could sell some real-estate stocks short, meaning that you sell stock you have borrowed for a predetermined period. If the price of the stock falls, you purchase it and return the shares, pocketing the difference.
The danger, however, is that the stock will climb once you short it.
If you take the opposite -- and far more common -- approach and buy a stock, you know that your potential loss can only be what you invested.
If you want to short real estate, you have many different stocks in the field.
For instance, you could short one of the many real estate investment trusts that you note have done well this year.
Or you could short one of the nation's publicly traded home builders. You might want to look for one that markets to first-time home builders. Of course, many are private regional companies that would be off-limits.
In addition, you could go a bit further afield and short stocks that deal in real estate mortgages, such as Fannie Mae or companies that provide home-building materials and supplies.
While the real estate industry is red-hot in California, that's not necessarily the case in all other parts of the country.
Also, a home is a great tax advantage investment and, historically, real estate has kept up with inflation.
There's certainly been a lot of talk about the so-called housing bubble, but for the most part, even if a home declines in value for a while, the homeowner will not sell it.
Q: What is going on these day with United Airlines? Is it out of bankruptcy protection yet? What symbol does it trade under, and what exchange lists it?
- Lynn B., Sacramento
A: United Airlines stock trades now under the symbol UALAQ.QB on the over-the-counter bulletin board market. The share price closed Thursday at 60 cents.
Most of the experts on Wall Street expect the airline's shares to be worthless when the bankruptcy process wraps up.
Last week the company said it had not decided whether to try to exit Chapter 11 bankruptcy protection late this year or early next. Its overall plan is to fix its problems before exiting from court protection.
The company is reported to be in negotiations to get the necessary loans that would replace special bankruptcy loans that it has been using.
The airline filed its bankruptcy petition in December, the largest such case ever in aviation history. At that time, it said it expected it would take 18 to 24 months to emerge from bankruptcy protection.
Q: We have custody of our twin granddaughters. They turned 17 on July 2, 2003. Are we eligible for the advance (child tax credit) payment? And, will we get the tax credit next year since they were 16 half of the year?
- Bev G., Sacramento
A: Because the children turn 17 this year, you would be ineligible to receive the check, IRS spokesman Bill Steiner says.
He notes that the IRS double-checks with Social Security records to verify those eligible for a payment of $400 per child.
Starting today, the IRS will begin issuing advance payment checks to about 25 million taxpayers who claimed the child tax credit on their 2002 tax return. Those who did not claim a child tax credit on their return will not receive an advance payment.
The payment is an advance refund of the expanded child tax credit for the 2003 tax year. The child tax credit will increase to a maximum of $1,000 per child from $600.
Generally, taxpayers are eligible if you claimed the child tax credit on your 2002 tax return and the child was born after 1986. The IRS will send you a notice of your advance payment amount a few days before your check is mailed.
Q: I am thinking of investing in the Wilshire REIT Index Fund (ticker symbol RWR). Could you give me an opinion on this investment? I am somewhat conservative but would like to get a better return than what the money market fund is paying.
- Bill T., Fair Oaks
A: Actually called streetTRACKs Wilshire REIT Fund, it's an exchange traded fund run by State Street Global Advisors. The fund managers try to match the price and yield performance of the Wilshire REIT Index.
The fund has a lot going for it, including a very low expense ratio and decent returns.
It closed Thursday on the American Stock Exchange for about $131.58 a share, off its 52-week high of $132.94 and well above its low of $104.
Among its top holdings are Equity Office Properties Trust, Simon Property Group and Equity Residential Properties.
As a REIT, it falls on the value side of the equation, which cuts down your risk but won't net you large rewards either.
Morningstar reports that this fund, which was started in April 2001, has virtually been in the black since its inception. The fund gained 2.2 percent last year and is up 13.2 percent this year. In addition, it has a very comfortable yield of about 5.3 percent.
While the fund has not been around all that long, the index that it mirrors has and has performed quite well.
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The Bee's Jack Sirard can be reached at (916) 321-1041 or jsirard@sacbee.com.
