If they're issuing 19% new shares per quarter (which is what it takes to double shares-out every year) that's a large and growing number of shares. And to keep it rolling they have to never miss. Just look what happened to FB and ask yourself if they'll get good prices in a followon issue any time in the next couple of years. If that ever happens to AGNC they may not be able to get BV for the next SPO.
As for anyone looking for "a reliable 20% performer", count me befuddled. There is no such thing. This state of the markets is not stable. We're here because the rest of the world is upside-down and this sector just happens to make a lot of money when the powers that be are begging people to borrow at near-0% interest. That can't last. Either the economy will improve and spreads will shrink and yields will drop to "normal" levels, or it won't and everyone's money will be cancelled on account of the world is insolvent (see Greece). The dollar-denominated reset button is not the course we want. Some day, not very soon but starting 13-18 months from now, the rotation out of mREITs will start in earnest before the Fed releases itself from its promise on rates. I'm not fearing it, I'm counting on it. I just wish I knew what was the next big thing.
Until then, ride the surf while it's up.
"They get paid on total shareholder equity, not equity per share"
I am thinking that we might be experiencing a shift in how these equities are perceived relative to yield. The conventional wisdom is "watch out, big risk, it will all come tumbling down". But as NLY ages and still puts out 12-14% and AGNC retains the throne above 15% for going on five years now, there is a track record that looks too inviting to people who manage their own investments and need a reliable 20% performer. Some on this mboard think that the divyyield curve will come down via pps upswing as demonstrated stability becomes valuable.
So, if that happens and mReit equities are popular at significantly higher prices, does it make any difference as to the frequency of spo's? I mean at a 1.5 dollar temporary price drop, the offering shares should get vacuumed up no matter what the trading range is. At that point the convention popularly becomes, "Priced at 33% above book is a deal because look at what the return is." And then acceleration of BV occurs because of relative p/b accretion.
Wow Rim that is amazing. That's pure skill to make 126%.
I'm still trading the shares, I made the dividend with AGNC and 3x the dividend with MTGE.
I really want to trade options, but I feel wary for the same reason I don't play poker or blackjack. Too many sharks to eat my lunch money.
>>My mom used to say that's the, "pot calling the kettle black". I call it hilarious. C'mon, even the old, bitter, jealous, crotchety, retired scientist in you has to laugh at that!!<<
Thanks for the evening chuckle Doc.
Great post! Go longs!!
>>But it takes a much stronger will power to buy and hold than most traders possess>>
You are exactly right Seadestiny as far as myself. I won't hold onto a steering wheel when my car is going to go over a cliff. I jump, hopefully before the car is heading down over the cliff..
Hey, I remember you telling me that you hold on, though, while the car is on the 32ft/sec/sec descent, right? . You shared about holding on with this stock:
Had a bad Sept last year, right? Bet those buy and hold people bit the big one on that. I wonder how the traders did? Hey, I get it!! You are upset that we traders only take part in the profits, most times, but not in the pain of the buy and hold crowd!! Is that it? What a revelation! Sometimes these bursts of clarity just come over me.
>>IMO, traders are the suckers in this stock>>
Like X, making his 145K in a couple weeks!! Congrats again X. Or Rim with his 600 Calls, he probably reaped 6 figures in about a month or so...Way to go Rim!
>>Option fees, taxes, and minimal gains or losses (relative to buy and hold) are the reward for the impatient>>(Uh, I think X and Rim will be willing to pay those out of their 6 figure profits...;-))
I like you Seadestiny(esp with the cool name), but stand back and smile with me at this:
>>The truly smart play here is to buy, collect the div and hold for the great cap gains to come>>
Now remember you are making a great prognostication (prediction)with that statement. You follow up with this:
>>the impatient, ego-maniacal traders that think they have a prescient, mind-bending-power-lock on the price movement of stock>>
My mom used to say that's the, "pot calling the kettle black". I call it hilarious. C'mon, even the old, bitter, jealous, crotchety, retired scientist in you has to laugh at that!!
I wish you well Seadestiny and all the AGNC Longs...Go AGNC and MTGE!!
"The truly smart play here is to buy, collect the div and hold for the great cap gains to come. Option fees, taxes, and minimal gains or losses (relative to buy and hold) are the reward for the impatient, ego-maniacal traders that think they have a prescient, mind-bending-power-lock on the price movement of stock. But it takes a much stronger will power to buy and hold than most traders possess, IMO. "
I am so glad people like you are in this world. You make what I do easy. ;)
Actually Jet my return for this quarter net of fees and commissions was 126%. It will take a long time for a buy and hold strategy to come up with that kind of yield. I migrated from a buy and hold strategy to option trading only starting last year and for me personally I sleep better now than before.
GL2UA and go AGNC and MTGE.
The only way to make a higher return than holders who buy at opportune points in the cycle is to use the magical leverage of options, which also leverages up your risk, lowers your liquidity, and charges you much higher percentage vig in fees and spreads. You can indeed make hundreds of % of annualized IRR with simple acts of boldness that actually have more underlying them than first glances, but you can also get your lunch-money taken away by black swans, hungry hungry hippos, Greeks bearing gift horses, and the day Ben Bernanke finally says, "what the f.uck," and up-ends his worldview.
Do your DD and YMMV, I'm trading options but I'm also keeping a base in the shares to smooth out the ride.