We all need to remember the history of what we have recently been through. Look back to the debt ceiling standoff at the OK Corral. That wasn't very long ago(settled Aug 2nd, 2012). Remember? What happened 3 days later(Aug 5th)? That's right, the S&P downgrade to AA of our Sovereign Debt.
How did the mReit sector respond? On August 7th we went to 30.30(low) from 35.16(high), two days before...almost 5.00 dollars in two days. Remember all of the slugs that crawled out from under their rocks with all of their 'end of the world' warnings? Same folks with different names now. We stayed in the 33's for a couple of weeks and as the Sept EX approached we reached an all time high(that's right AL) of 36.77, two days B4 EX. That was over a 6.00 rise from the Aug 7th low.
More later, its snowing, and I have to go take care of the 'honey do' list...Bottom line...this is AGNC, not CIM....and we'll see 35+ B4 EX in Dec. Watch WMC also..there is a great stock ...
Thanks to all for their replies...;-) I am still believing(and betting) that there will be a remedy proposed and implemented for the Fiscal Cliff dilemma. Whether that will come sooner or later(Dec 31st), is up for grabs. I am betting Dec 31st. That will make the EX more of a challenge, but this is how I see it:
There will be plenty of buyers, once the 1.25 dividend is announced, who will step up to the plate to get the prize of the dividend. I am hoping(and betting) that the EX will be B4 Dec OPEX(my birthday, the end of the Mayan Calendar and the world, Dec 21st). Doesn't matter for the Cliff discussion because I am out at OPEX.
The Fiscal Cliff play by Congress(an Obama tragedy...as opposed to a Comedy.. although some might argue, and find merit, for the latter) will still have one more trading week B4 the car of state rounds that tight, hairpin corner and begins a 4 wheel drift towards the cliff....oh my!!(Hands over mouth), and all bail out, rolling and skidding on the pavement using their dividend dollars for chaps, as our elected idiots play it out to the very edge of the cliff.
Alas, we all escape, as the PPS retreats from 35 to 30 by the 31st. I plan on loading Long Puts post EX as the drama unfolds. A story is always(IMO) more exciting when it is less predictable....what do you think??
I hope AGNC can stay around these levels and maybe even dip below 30. I'm planning to transfer most of my winnings from fb (theoretical gains ofc) right into the agnc and mtge calls/short puts. Hoping for a good finish to this quarter, because october was a nightmare.
Thanks for the Pep talk Doc...
I am still quite positive on AGNC, as you are. Just wish I waited until after elections to re-enter...
Now we just need everyone to quit talking politics! :-) The best thing about this week is that the elections are over and hopefully things will settle down and get back to normal soon. I concur with your comments regarding no partial agreement on the tax cuts, I think that this will be a game of brinkmanship until the very last moment. I just hope it does not stand in the way of AGNC's run-up.
I'm happy to hear from you, Doc. Thanks for sharing your ideas. I plan to enter Agnc around November 21 or the 23rd of 2012. When the December12 Agnc Calls have lost most of their value...due to time decay. This is my ideal entry point and I plan to sell all my Agnc call positions 3-4 days prior to Dec Ex-div date. Good luck to us all : ) I'm buying the December12 Agnc calls for the same reason people buy cheap beer...more bang for the buck and higher volatility.
Sentiment: Strong Buy
As long as the threat is looming, the sector will be soft. Every time compromise gets a little more certain, it all comes rushing back in. Keep one eye on the news channels and your finger over the button.
It all comes down to timing. I could agree with you if Washington appeared on the verge of a resolution, but given the recent comments from both sides, I don't see that happening. Obama still seems unwilling to accept anything that doesn't include rate increases on the wealthy and the Reps still seem unwilling to accept anything involving rate increases, period. I don't see a resolution coming any time soon.
The debt ceiling battle and downgrade came almost 2 months before ex-dividend, leaving plenty of time for recovery. This showdown appears destined to come to fruition near ex, if at all.
You could make a lot of money buying now, but its a bet on Washington. That's simply not a bet I'm willing to make right now.
I know you posted this before Obama made his comments. Do you still feel the same way?
"""I know you posted this before Obama made his comments. Do you still feel the same way?"""
If this will indeed solve part of the uncertainty, then yes...because, the fundamentals have not changed(re AGNC)....Here is the meat of the President's statement today:
"""Now, fortunately, we shouldn’t need long negotiations or drama to solve that part of the problem. While there may be disagreement in Congress over whether or not to raise taxes on folks making over $250,000 a year, nobody -- not Republicans, not Democrats -- want taxes to go up for folks making under $250,000 a year. So let’s not wait. Even as we’re negotiating a broader deficit reduction package, let’s extend the middle-class tax cuts right now. Let's do that right now. (Applause.)
That one step -- that one step -- would give millions of families -- 98 percent of Americans and 97 percent of small businesses -- the certainty that they need going into the new year. It would immediately take a huge chunk of the economic uncertainty off the table, and that will lead to new jobs and faster growth. Business will know that consumers, they're not going to see a big tax increase. They'll know that most small businesses won't see a tax increase. And so a lot of the uncertainty that you're reading about, that will be removed."""
Yeah thanks for the MLP tips. ;)
I'm thinking the only reason AGNC and other MREITs are staying up today are because mgmt is buying back the stock. Notice that AGNC always bounces back up when it slides to 30.
I remember seeing the same thing with FB, it always bounced up from 38. Then the money ran out and the stock price slid down.
I think there will be a big run for dec ex too. I just don't think this is a good price to buy. We still have 3 weeks left in Nov...
Good perspective, Doc. When I need a pickup, I just sing the Michigan fight song. Well, not really, but I would recommend it to everyone else. You know, Prez Ford, who was an all-american football player at Michigan, used to have the Michigan fight song - "Hail to the Victors" - played when he entered the room as Prez rather than the traditional "Hail to the Chief" ... and he was happy all the time. ;-)
Have to admit, I don't take Doc's word at face value, nor anyone's ... I do my own research. And have to admit I bet against Doc a couple of times ... and o-yea, have to admit I lost a few K$ on thoes bets :-P I won't go so far as to say "it must be true", but I'm done placeing ANY bets against his wisdom!