into income taxable dividends. Now that
ain't swooft. This baby is leveraged 10x's
and will crater when interest rates even
twitch. Take your dividends now and lose
all your principle soon. There are fools
for scams like this born every minute.
This is NOT how agency mREITs work. Certainly interest rates effect mREITs but they DONT lose money when rates are high. They are still profitable but not at the same pace. The only way they can "lose" money is if they sell and realize a loss but since they are not forced to sell (no margin calls or equity concerns like banks) this scenario will not happen unless the REIT itself has another reason to do so.
There is plenty of history to back this statement up. Look at NLY's historic earnings chart vs interest rates. Note that they had an excellent 2007 when rates were high (about 7.5%). They had a bad year (on paper) in 2006 due to realized losses but their actual operation was still profitable. They simply chose to take the losses and put the money elsewhere.
mREITs are not a ponzi scheme. The only way it can be abused is if people start issuing fraudulent CMO's but since agency REITs only invest in gov backed, this is a non-issue. The only way for these REITs to fail outright is if the US doesnt pay their debt (which almost happened when the debt ceiling was an issue) though we already knew it would not effect agency paper rather direct operations.
I'm never held any ARR.
Don't want to influence the stock,
just want to inform those who do and are
misled into believing this has
something to do with government
As for Fed transparency, no earthquake
is ever expected.
Richad, certainly there is risk.
Hopefully everyone who invests in Mreits understands that.
The fed has stated many times it's committed to keeping short term rates near zero until mid-2013.
obviously that target can move depending on how things go with the economy.
Fortunately the fed is also very transparent about what it wants to do as well.
There shouldn't be a sudden spike in short term rates our of the blue.
Richard,you must have a reason for the false information you are posting.
Calling MREITS a scam is a bold face lie and you know it.
Are you posting this false info.in an attempt to influence the price of this stock? YES OR NO.
Richard I agree from a longer horizon. What happens if you margin your cash account 10 x and the market falls 10%. Your losses are huge and this could happen here. I've made a lot of money on this stock but have no pos now as I'm afraid of what might happen. The gains are not worth the risks for me at this point. Thx for sharing an honest opinion supported by facts even though not popular on this board.
" mREITs are not thrifts or banks... they dont leverage on depositors money. They leverage on their money. Thus, there is no such thing as "margin call" or "run on the bank" when it comes to mREITs. Even if BV falls, they will not be required to liquidate unless they can no longer manage their leverage in which case, watch out but most mREITs have enough gov backed paper that they can easily cover their margin even if all their non-agency fails. Thus again, your S&L scenario will never happen on those points alone. "
You make my point. They leverage the money they
have ( i.e. investors ) and buy long, long, long term notes. All notes fall when interest rates rise, even sacred government ones. This
scam is a reproduction of the 80's S&L sceme.
Saying it's backed by government paper doesn't
provide protection, none at all. At least the
It's been hit hard the past few months because
people are becoming aware of the problems here
via the financial media. And despite long
term rates falling. It should have gone up
not down !!!!
...seriously guys? mREITs are not thrifts or banks... they dont leverage on depositors money. They leverage on their money. Thus, there is no such thing as "margin call" or "run on the bank" when it comes to mREITs. Even if BV falls, they will not be required to liquidate unless they can no longer manage their leverage in which case, watch out but most mREITs have enough gov backed paper that they can easily cover their margin even if all their non-agency fails. Thus again, your S&L scenario will never happen on those points alone.
Now, lets say we had a bunch of huge non-agency mREITs fail, then we will have a problem. Can you please point me in the direction of this massive non-agency mREIT that is "too big to fail?" There arent any.
Recall the S&L crisis; thrifts operated like banks and competed directly with them. If people took their money out of the thrift, then the thrifts net value changed with it. Thrifts were depending on depositors to leave their money in the thrifts indefinitely (an asinine assumption and same mistake banks made). Then they leveraged like a bank (using depositors money) to gamble on real estate creating a bubble.
Then when good real estate was all gone, they started making up fraudulent real estate deals especially in Texas (remember Bush's brother?). When the fraud was uncovered, liquidation ensued and real estate prices plummeted sending even the good thrifts into crisis due to decreased net worth (domino effect).
We are in The Great RECESSION in case you have no noticed. People are not making ridiculous loans any more and vacant properties are everywhere. Prices have already plummeted by about 50% and buying a home will now save you money over renting nation wide. During the bubble, you actually had a cash flow negative when buying investment real estate. This has completely reversed especially in housing where you can buy a house with 20% down and pay a mortgage that is 30%-50% lower than what you can rent the same place for.
I am not saying that mREITs are impervious, nor am I saying to hold them long but lets at least be objective. If you believe that we will enter a depression soon then thats your opinion and you should avoid any non-agency mREIT but you still cant touch the agency REITs. Why do you think they wanted to regulate mREITs more? Its because agency REITs have almost no risk yet enjoy the benefits of high leverage and REIT tax exempt status. Basically, the higher ups think its unfair. This is why mREITs were hit hard the past 3 months. Fear of change in regulation.
He is correct about the savings and loans. I was able to get all of my uninsured money market money that was paying 16% out just before home fed s&l closed its doors early 1980s. Others lost and all share holders lost. That is why I sold all of my CIM today i lost 45% on it after re-invested all dividends. I have lost on ARR also but I will break even in two and 1/2 years of dividend here.
too. Yes, I can read a financial statement.
It ain't rocket science. This mREIT is leveraged
10x's using short money to buy long notes.
Any fool can see that's a major no - no .
The S$L's in the 80's did the same thing.
They ALL failed.