REITS and Dividend Investment Strategy Extremely Dangerous!

Haiz, just saw another video by a renowned YouTuber roasting REITS and dividend investment approach. First REIT, Manulife US REIT, Prime REIT, Keppel Pacific Oak, Dasin Retail and Parkwaylife REIT were all quoted as perfect examples of why it is a bad idea to be invested in REITs for dividends (think a few weeks ago, he also mentioned that investing in local banks DBS, UOB and OCBC is extremely dangerous). Apparently, stock picking is frowned upon and branded as extremely dangerous with potential huge loss of invested capital. Index funds such as SPY500 or even REITS ETFs are the best way to invest for common folks as asserted by the YouTuber. I will just make a few quick highlights of my thoughts:

1. Most retail investors are not silly and practice adequate risk diversification.

I have not seen fellow investors with First REIT or Manulife US REIT making up 50% or 100% of their portfolio. If one has adequate diversification and holding on to a basket of REITs, it is as good as buying into a REIT ETF. Even if a REIT went underwater, one would be able to quickly recover from such losses. 

2. Index Funds like SPY500 are the safest and highest proven return track record than stock picking?

I think you will be very surprised to hear that from 2000 to 2009, SPY500 index actually performed badly and returned a negative 9% (inclusive of dividends).  I was surprised to hear that too from Gregory Van, the CEO of Endowus on one of the YouTube videos. This has a bearing on point 3 below.

3. Index investing does not allow one to have recurring cash distribution without hurting capital at the worst market sentiment period.

As alluded to point 2, for those retail investors like myself who needs frequent cash distributions, using Index funds like SPY500 as strategy will mean selling part of the units at the worst possible time during lousiest market sentiment to raise cash-I think this is a very bad idea. 

Parting thoughts

I think that everyone has their own unique needs when they craft out their investment strategies and approaches. Investing in REITs and local banks to me will still form the core of my investment. This is not to say that I disagree with index investing. For the record, I have been using SPY500 as an investment avenue for my CPF ordinary account funds since late last year and derive good realised returns during the recent rally where I sold them off. I do recognize the excellent risk diversification with an index investment that is broadly diversified into hundreds of top companies and sectors with a long term proven historical return.