Category Archives: downside

Markets are built on precedent.  For this reason, we will display the downside targets in two prior periods to establish the history for Simon Property Group before getting to the most recent decline.  We also provide the upside resistance targets for those hoping to “play” the move to the upside.

To get yourself familiar with the work of Edson Gould’s Speed Resistance Lines, we recommend that you review the our article titled “The Power and Lesson of Speed Resistance Lines” dated February 4, 2018.  Since that article, approximately 90% of the Speed Resistance Lines that we have run have come to fruition.

Simon Property Group Downside Targets

1993-2000

The mid-range target is a point to watch as it generally defines the balance of the direction of the stock price.  Notice how SPG managed to rise and then decline below the prior low.

1999-2009

As should be expected, the decline in the run from the 2007 peak was almost down to the prior starting point as the decline was generally a result of the malinvestment in the real estate sector.  As noted in the chart, SPG managed to not replicated the prior cycle of decline from 1998 to 1999.  However, it did get pretty close.

2008-2020

The decline from the 2016 peak should not be unfamiliar since it is almost a replication of the decline from 2007 to 2009.  If the current decline were to replicated the 2007-2009 decline, it would bring the price of SPG to $34.16.  This number is not too far from the $36.04 level indicated by the price-to-dividend ratio as outlined in the 10-Year Target that was previously posted.

Upside Resistance Targets

2016-2020

Assuming that the $34.16 price is the downside target and investors are willing to accept such a risk, the upside targets are very compelling.  The first upside target is $135.81, or nearly 100% above the current price of $70.  However, anyone willing to participate in the potential decline to $34.16 need to accept that rising to $197.31 is still within the declining trend which could conceivably result in a decline back to the $44.01 price.

Our primary concern is with downside risk and therefore if a real estate investment trust must be bought at this time then we’d prefer a position in the Vanguard Real Estate Index Fund (VNQ) over individual names where the volatility is far above our tolerance levels.

see also: U.S. Realty from 1918 to 1945