Hey all you great AGNC board people! I have been hearing (somewhat randomly) about those of you who think we should be in all cash, or nearly so, by the end of the month. I typically haven't heard any contrary opinions expressed.
So, I thought it would be informative to ask...who's gonna be all cash (or nearly) by the end of the month and why...AND who's not! and why.
Post away, Team....this should be very educational (at least for me)
In recent years and months, I have adapted to a sometimes volatile and flat market by staying all in cash UNTIL analytical methods tell me that the time is right to get back in. As an example, market news (and the quest for a better return than the market was giving in this period of low interest rates), I found AGNC. Then, joining this BB, I was guided to options on AGNC as a mechanism to achieve even greater returns than AGNC's high dividend. (Dividends have a way of shrinking in poor economic environments, and we're in one of those now.)
Thus, I changed my strategy from investing for the long term (in stocks like KMP, KMM, FLPSX and FCNTX --- all of which have provided the most consistent, high ROI, with the least risk according to my patented analysis method) to investing for the short term (i.e., sit in cash, then get and get out quickly with higher profits than the more traditional buy-and-hold, and sit in cash again until the next predictable period) in AGNC Call options. I am convinced that buy-and-hold no longer works in today's market, partly because of computer programmed trading by the large institutions that can play havoc with the market. In just the last 2-4 years, their market influence has been greatly magnified, accounting for "flash crashes" that we have seen in AGNC's stock. (Fortunately in AGNC, those crashes have been reversed in 1-2 trading days; other stocks have not been so lucky.)
I selected AGNC Call options, after about six months of study and paper trades, because of their greater PREDICTABILITY than any other stock, bond, or mutual fund that I could find --- I would not recommend this strategy (options play) on other stocks that do not have this PREDICTABILITY. AGNC has had a very stable, predictable pattern revolving around its quarterly dividend declarations. Play it right and one can earn very large % ROI (typically, 40% per quarter in my experience ... your mileage may vary).
Cash is my base investment, augmented by periodic investments in AGNC Call options (there may be others that fit the criteria of stability and predictability,too) because cash is not susceptible to market corrections (and nothing is really lost in interest-bearing accounts with 0.01% ROI) --- I don't give back the gains that I've made.
Good luck and happy investing.
I plan on being out of all of my MLPs except one come the end of the month (I like ETP as a long hold). This opens a decent chunk of my funds (roughly 30%) which I will hold onto unless I see any attractive entry points. I also entered in some positions in REITs this week (MTGE, NYMT, and WMC) if there is some decent price appreciation come November I may limit my exposure and take some profits. As of right now my portfolio is yielding roughly 8% so my thought is to keep about 60% intact, trudging through any market downturn and use the other 40% to buy anything attractive that may present itself on a pullback.
I’m looking at retirement next year and have been playing it closer to the vest – I went to 80% cash at the end of March – obviously a mistake. Over the last 25 years I’ve stayed pretty much 100% invested. Sure I got thumped a few times but when I look at where I started and where I am now I’ve done damn well.
I’ve never liked the current administration and have become increasingly worried about the trajectory of the country. When you look at Japan’s stock market going down for 22 straight years (40,000 to 7,800) it makes me shudder.
I’ve held a 20% stake in gold and silver since gold was $450/oz – anyone with half a brain knows that we have inflation regardless of what the government says and I expect that to accelerate in the coming years.
Please get me out of the MLPs even and then I’m all cash (except my gold and silver) until the election and some resolution about the fiscal cliff.
My plan is to die broke – I use 90 as my DOD for financial planning and if I actually make that long I’ll become a ward of the state. My passion is underwater photography and I’ll be headed to Honduras shortly to photograph sharks so maybe Mother Nature will intervene and I won’t have to worry about it.
We all know the there is a black swan soaring somewhere and I’m afraid it’s Iran (I doubt it’s Dec 21) – no idea how to play that one – maybe we should bring back lead based paints – just my two cents.
As I recently posted on another thread, " I cashed out several weeks ago, both trading and many core positions. So far I have a large net positive for this move. I'm back to dipping in and out on a very short term basis based mostly on the local technicals. Why? We have another confluence of negative impairments approaching. We have the fiscal cliff dilemma which no matter how it is bridged will set another batch of impairments in motion. We are facing further credit rating reduction. Unlike last year, another downgrade will make a real difference on what the US pays in interest on its debt. We have a declining productivity trend, earnings and revenues are generally in decline. We have Europe which beside its monetary dramas is now facing reporting that they are officially back into a recession. It appears not too far down the road the nuclear Iran issue is going to become volatile. We have equity markets that have bucked the trends for many weeks now. We have institutions and hedge funds still sitting on large short positions due to this dislocation.
I know this sounds rather dire and I'm sure not every issue will take the path of a worse scenario possibility. It is the confluence of the negative possibilities that will sink the markets plus a conglomerate of market makers jumping onto the bandwagon. The media will only fuel the fire. Till the end of the year cash is king IMVHO."
I will be all in cash as soon as I finish my MLP trades this week CQP,EDP,PAA. I will remain in cash until after the election and we have some resolution for the fiscal cliff facing us Jan 1. I also just feel more comfortable trading the market instead of investing in it. Just my humble opinion
After I manage to extracate myself from CQP and PAA later this coming week I too will sit on cash until I know election results and know what the tax code is going to be and see some resolution to the fiscal cliff. Then I will #$%$ the climate and decide whether to reenter any option trades or continue to sit on cash (or convert more of it to PM's etc).
I am currently all cash and will remain until after AGNC earning report and the results of the elections are known. Although I think good things will happen after the first of the year, Congress has a lot to accomplish before the end of the year and I will be very cautious until I see some better waters to sail.
GL2UA and go AGNC.
Thanks for reminding us Architecturaldiva(tell us how you got that name) of the dichotomy of thought among equally astute traders.
I value Rim's thoughts, which have been my own, for the last few years for the same reasons he mentions, until recently. I also value Onion's thoughts which are becoming more my own, as we approach the flame.
The 'flame" is indeed the uncertainty, which it always has been, in the markets. The not knowing, the fear, the greed...in a word, perception. One of my biggest questions(uncertainty) is how the mReit space will be perceived as/if the tax code is changed on the first of the New Year. Yes, we know that it "should" be well for us because the dividends are already taxed as ordinary income for mReits and that we should have ALL of the folks switching to the same in light of the detrimental effect that will be theirs on their current qualified holdings.
But the "truth" or the "facts" often get sacrificed on the altar of fear and misconception. Honestly, I don't know. I was laughing at the whole Y2K , end of the world scenario, as we approached that New Year also. There were the dire prognostications, and "sandwich board" evangelists crying God's Judgment Day warnings during that time...remember? I didn't believe it...I listened to them though, and stocked up on some extra groceries, batteries and water, just in case...)in reality, I would not have done that...but I live with a fearful(prudent) woman...and no, I am not Mormon...;-)
So what to do..I once again am averaging my potential losses/gains by staying 70% cash and the rest in derivatives and Preferreds. Until I hear a compelling reason to not buy Preferreds they are my Soup De Jour...and I am on the hunt for more. I do not want to hang my balls out as much as I do, in the future(who else recently said that...Onion maybe?). I risk losing 5-10% of my portfolio every month. I might do that in this lame MLP space this very next week, as we approach EPD and PAA and that weak CQP's EX dates.
I also listen to Lenloc on the MTGE board. He is maligned by many, and sometimes for good reason, but he is my "Go To" guy for the Short Puts. I like them even better than Preferreds, so far. I was upside down on a mistaken GTC order, I neglected, and received a bum fill on WMC. Down 400% as the mReits tanked last week(overnight...listening AL...so much for a stop to take you out at 10% loss...;-)) Had to roll to 13Jan on the 22.50's for a 20.80 BE. I am enjoying Lenloc's concept of recycling. You can potentially still lose "big", but the rewards(for me) have been good.
Long answer, but hopefully it helps others as we all "work through" our own risk(fear) management of our portfolios in this uncertain time.