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American Capital Agency Corp. Message Board

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    • Yep. In 2005, NLY dropped to $11/share and paid a 3.5% dividend.

      Buy and hold is a moronic strategy. Even Warren Buffet reviews his stock holdings on a regular basis and trims the losers.

    • Terr,

      It was worth repeating ;-)

      Management was golden in many companies during the 90's tech run also. Yes, the companies were at obscene multiples but we all said the same thing "I want some!", and investor buying continued even in light of those multiples. Many of those companies had great management also and we trusted them.

      Shoot I owned a number of stocks. One of my favorites was QLGC. June of 1998-May of 2000...so sweet. Folks got in at $45 rode up to about $130, split 2/1 rode up again to $160, split 2/1, rode up again to $195, split 2/1, rode up again to $200 So investors bought and mortgaged their houses and bought some more then mortgaged the wife and kids and bought some more..I wish I had been on that triple mortgage train with the caveat of "knowing" the ride was over.

      That happened in March of 2000 with the stock breaking $200 again we all thought whoopee...I was often making $7000/day on only 1000 shares...the greed was working wonders ;-) PPS declined from that $200/share to $80/share in under one month..never to recover...it was over.the whole tech world suffered. Great names like MSFT, CSCO, INTC, EMC all got flushed as the herd left tech en masse.

      So now we have AGNC and yes it is a great stock and yes, management is doing a great job, and yes we will all make money for now...but when interest rate fears arise,..it just won't matter how good the companies are without investors to purchase the shares..

    • The Fed hasn't always driven the bus, in fact many would say they seldom drive the bus, but rather react as best they can to economic challenges. Sometimes this reaction is knee jerk and sometimes too slow, and sometimes dead wrong. I hope we get lots of warning, but we will have to be observant. My problem is one that has been shared by the Fed, a level of disbelief, or belief that it is a temporary phenomena. Once we realize its for real, we have lost so much stake that we then resort to waiting for the rebound...and on and on.

      So is Bernanke right about inflation being a temporary commodity driven spike correct? My mussels at Costco cost 10% more today than last month, they say no. If he is wrong the fed will be quarters behind in tightening and controlling inflation and may then resort to knee jerk - really without choice. Point is anything is possible even if not desirable.

      As Reit said, nothing is forever.

    • One problem is that the Fed hasn't always driven the bus, in fact many would say they seldom drive the bus, but rather react as best they can to economic challenges. Sometimes this reaction is knee jerk and sometimes too slow. I hope we get lots of warning, but we will have to be observant. My problem is one that has been shared by the Fed, a level of disbelief, or belief that it is a temporary phenomena. Once we realize its for real, we have lost so much stake that we then resort to waiting for the rebound...and on and on.

      So is Bernanke right about inflation being a temporary commodity driven spike correct? My mussels at Costco cost 10% more today than last month, they say no. If he is wrong the fed will be quarters behind in tightening and controlling inflation and may then resort to knee jerk - really without choice. Point is anything is possible even if not desirable.

      As Reit said, nothing is forever.

    • I think the risk is overstated, especially for NLY with the proven track record. But I think AGNC is also well-managed. I've looked at NLY over several market cycles, and reported in my last email about the tremendous overperformance vs. the S&P. This included several gut-wrenching declines in share price and dividend, but interest rate cycles are predictable to some extent.

      In the current environment, I do not expect the Fed to come anywhere close to inverting the yield curve, which is the death knell to dividends from these agency reits. The economy is on shaky ground. NLY, AGNC and others in this space are hedging their book value exposure and will have ample time to react to a risining interest rate environment. If the Fed decides to raise rates next year, they will do so at a very slow pace and may stop for some period of time. The economy cannot affort another recession and the Fed knows it. They will be extra careful. During this time, NLY, AGNC and others in this space will continue to mint money.

    • I have to say Cramer has kept you out of this run for 40% gains in the last 2 years.

      Jimmy, you worked for Goldman Sux didn't you? We knew what they were selling and it was complex horse dung?

      Didn't they have the A123 IPO that turned out to be a debacle from $17.50 ipo to current $5.80 ...OUCH!! Jimmy you were wrong and associating yourself with those schills is more profitable then siding with the truth we get it1 don't blame you, greed is GOOOD! the rest of you repeat after me!! GREED IS GOOD!!

    • Hey Terr,

      You are correct, thanks. I was simply saying that it is foolish to think any financial instrument is going to provide endless financial reward. The point was entirely missed by the other poster. It had nothing to do with a cf. between NFI and AGNC other than their great divi history and the similar talking heads promoting each. As you know, from history , there are bull and bear runs in all categories , whether it be small cap, large, international, emerging or commodities.

      Why not have the same attitude toward GLD...whoohoo..look at the run..just load up and retirement is paid for. Once again it is good as long as it is good and no more than that....enjoy the ride until it is over...AND be prepared to exit at the end of the ride..

      Take care!

    • Hi JCP,

      I think we share objectives, we have different investment strategies that's all. But I do feel that these are not investments to be left unattended. NLY is one of few long term survivors, which is why people like Cramer prefer it. I believe that AGNC is more aggressively managed with a higher leverage, this possibly means more risk of failure. On the other hand, this translates into a little more swing in PPS, which sets up for options trades. For sure this is playing with the devil, but it also means that you are on the sidelines at certain pivot points. To each their own, but I just wanted to set it straight regarding reit's warnings, I agree with him that this is a play that requires watching, whether you are long, short or both at various times.

      Just so you know I am long AGNC in my retirement account, in my investment account I am long on Jan 2012 calls, and on the sidelines with at the money short term June calls having made a couple of year's worth of equivalent dividend gain on their buy/sell in this quarter. I haven't yet gone so far as to sell puts, but when I do, it will be purely a reflection of the impending effects of ex-div and SPO. No pump and dump here - just playing the volatility and its predictive patterns.

      As spreads start to narrow, this position could well change, but frankly I like it just the way it is.

      Cheers

      Terr

    • Thanks, T2. It may just be that we have different objectives. I do not trade these stocks. If you study NLY's history, you will see that it delivered an average annual return over 18% for the life of the company. This was through ups and downs in share price. The key is to stick with these, thru the ups and downs, and just reinvest the dividends. Over time, your cash flow rises significantly and the market value takes care of itself.

      The other point is I do not expect huge drops in share price like in the past when NLY, for example, was cut by 50%. The key here was it was valued near 1.5 times book value at the peak. Now, it is only 1.14 times book at peak dividends.

      Good luck with whatever strategy works for you.

    • Hey,

      I am sure reits' counsel is meant very well, and is based on personal experience and burnt fingers.

      There is a very simple reason Agnc's Dividend return is so high, risk. Firstly risk that the spread will shrink in a changed yield curve environment, and second risk that securities will be repriced, even on higher LT rates, causing calls on the short term funding instruments.

      Ignore these risks at your peril, pick a comparison to your own liking, but it doesn't change a thing.

      And by the way, at some points the best way to protect your returns on Agnc is to be effectively short. It doesn't at all mean that Reits or those thinking like him would need to scare anyone. The dynamics of the dividends and the SPO's provide all the needed volatility, and who knows interst rate volatility will add yet another demention to be managed.

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AGNC
18.88-0.13(-0.68%)May 27 4:00 PMEDT