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American Capital Agency Corp. Message Board

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  • roym717 roym717 May 16, 2012 10:39 PM Flag

    Why Crash Happens End of Year

    Hey Olee and Pete

    Agree, too many wars and too high a cost in both lives, money and loss of personal liberties.
    4 Trillion spent on Wars is the reason US is in economic bad shape.
    (Kennedy and Eisenhower warned us that the insatiable Military Industrial Complex was the greatest threat to our democracy. Seems they were right)

    Hi Ray, not being paranoid, facts are the drums of war are sounding and getting louder.
    Ques. is what do we do with our investments? (And yes Defense stocks may be a good investment.)
    However, contrary to popular belief War is NOT good for the economy amongst other things.
    Witness were our economy is today.
    Remember $24 Oil in 2003, before the Iraq invasion?

    Not looking to make this a Political discussion as per tradition on this board frowns on it unless it's specific to investing. Plus we all have our different views and there are other boards for them.

    Ques remains, what about our investments if War becomes imminent?

    The average stock market drop at the start of the last 2 Gulf Wars was about 20%.

    http://useconomy.about.com/od/stockmarketcomponents/a/Dow_History.htm

    That would take us down 2500 points to approximately 10,000 from where the DJ is today. However, we are most likely to head lower as we get closer to war and the drop would be steeper. Below 10,000.

    How do we know if we're getting closer?
    Assad being ousted in Syria would be a definite milestone for the war as he is one of the last
    of Iran's mideast allies. The US and Allies have knocked off, Afghanistan, Iraq, Egypt, Libya.
    When Syria goes they will have effectively militarily encircled Iran. I'm betting it occurs this summer.

    First Gulf War Dow went from 3060 in the July 1990 Invasion to 2400 by January 1991.

    So I'm thinking I want to be out this summer when Assad goes, either by exile, suicide or murder.

    First, I want to Buy Puts in the Diamonds or Spiders at the equivalent of 1000 points below the Dow's closing average. That would gives us a profit of an additional 1000 to 1500 points below our strike.
    Could Be Extremely Profitable.

    Second, I want to have plenty of dry powder to Buy up the bargains I missed in the last Crash.

    As for our beloved AGNC - I think our divvys are safe this year. However, I expect pps changes after December if war becomes imminent.

    Hopefully, none of this comes to pass.

    Constructive remarks are always welcome. Thank you.

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    • I don't want to sound flip about a war ... I was in one myself.

      I am investing primarily for income, so, war or not, I'll stay in the high yield stocks [like AGNC/MTGE] that should produce income regardless of the bullets flying. Actually, war is often good for the home economy. Now, if the pps goes down some, it is of less concern to me as long as the divy's continue; you may not feel that way.

 
AGNC
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