She was tired of getting .25% interest in the bank, and wanted a much higher yield. .After 1 year , she is down $92,000 including her monthly reinvested dividends. What should I tell her?
You should tell her to hold. The book value is much higher than the current share price and the next financial statements should verify this. The Taper Tantrum has passed and the share price should gradually come in line with the book value.
Being her garnchild, could you have leaned on her a bit not to purchase over 13, 000 shares which was what 92,000 oughly would buy at 6.75 . I can have much credibilty in this story because she went from a savings account to a high risk investment . Can't prove it but I do not believe you, You may well be the grandma.
Still getting a good dividend.
It sounds like you are either a short who is liar, or need to put the money under your mattress.
In time, the price will come back. You are still getting a good dividend.
That flash trading is killing the stock market. The mREIT stomp down was brought on by an options market that expected the FED's taper. Short sellers were also reacting to the futures market and compounding the pressure when more and more options were traded expecting the interest rate rise. This week the 10 year closed at 2.65 which is well below the 3% that the futures were expecting. With all the unemployment (and under employment) that remains we are years and years away from rising interest rates. The current unemployment rate is not taking into consideration those that are no longer looking for work and those that are severely under-employed. It would look very bad for the current administration if we had a realistic unemployment figure (my estimation is that it's closer to 8.5 or 9%). The worst thing the FED can do is allow interest rates to rise. REMEMBER THIS: The cost of borrowing for the US treasury will go up when the bond rates rise. That will mean billions and billions of cost to servicing US debt. So once the HFT and speculators figure this out, the mREIT market will have more sanity in it's pricing. Also - watch for this: mREITs are required to pay out all profits. Since many (including ARR) have been reacting to the futures market, they have reduced dividend payouts in anticipation of raising rates. If rates stay at this level and perhaps go lower, the spread will be better and there will be excess profits that will need to be paid out. This will cause some to do that wonderful one-time dividend thing which is always welcome.