Seen on Google news and CNBC about balancing the budget, also mentioned by Treasury secretary TG a few weeks ago about phasing out/eliminate Freddie & Fannie. I just bought a few hundred shares of NLY 6 months ago, the dividends are so great, can't believe it! A fortune for a blue color. but i got panicky after following the news and sold them all last week.Bought at 17.60, sold at 17.53. As the "paper" NLY bought were guaranteed by government agencies, Freddie, Fannie, and GenieMae, I presume; what is going to happen to NLY when those agencies are abolished? Any one care to comment? Share your expertise and knowledge, please? thank you very much.
------ about phasing out/eliminate Freddie & Fannie -------
they may rename it, or say it is "phasing" out, but it would be replaced by something that does guarantee...
because without this guarantee, the depression we would be in now would make the great depression look like a party. so your main thesis is wrong.
hopefully the government gets smart, (like that ever is going to happen) and gets into the business to make money, instead of intending to lose money like what Fannie's dictates were, when they phase that type of stupidity out.....
making it a win win win, win....
win for the consumer at 3% mortgage rates.
win for the government, as they would make about 3% on trillions of dollars. (their cost of funds is ZERO)
win for everyone since the banks would have to evolve or die. companies like NLY being in the business would need their funds at 1% or less, which the government would do if taking over and creating 3% mortgages, because even the government would need help in such a huge winning program because of the shear demand for such a program......
win for the economy as the consumers would be spending Billions of extra dollars they would have in their pocket from the saving on their mortgage. (they always spend most of savings like this)
bonus win, the "middle class" which is the people actually paying their mortgage... would actually come out ahead for the crisis, since their pocket would be enhanced by the savings of hundreds of dollars a month because of getting 3% interest rates.
but alas, our government is "challenged" in the smart department. and "challenged" in the department of "making" money instead of intending to lose money.
Hi Varia, from my perspective I think you sold way too soon.
This change won't happen overnight, in fact could take several years. I think this investment should be safe through 2012, Holding AGNC, NLY, CYS AND IVR.
OK, the OP reacted too quickly but
"I think this investment should be safe through 2012,"
I don't think anyone should be smug and comfortable about any investment beyond about a 4-month time horizon. Too many things can change very quickly now and you need to be ever vigilant about individual stock market investments.
Farrell discusses this, go to the 2 minute point on this video for starters...a lot of information in these companion videos
From this you can definitely draw some conclusions
Greekmonster:Greatly appreciate your kindness.Those vidios are very informative. I think I'll buy some shares back at the lowest price possible, collect a few more quarters of divy to bring the cost down, worst for worst at some point the price might go down if ( IF! )the yield got reduced to 6-8%.I heard a little hint there when Farrell said something like "investors have the choice to invest in foreign bonds that yield 6-8% or invest in their community.."(with the same yield?) . There is one thing I also do not understand when at the beginning of tape I-video companion, Farrel said "we do not need double guarantee ..", besides government agencies, who else guarantee the mortgage backed papers?
Thanks again, greekmonster, wish you all the best.