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American Capital Agency Corp. Message Board

  • mr.phil2u mr.phil2u Jun 23, 2013 5:00 PM Flag

    6/26 ExDate

    I own 5 beaten down stocks with 06/26 Ex Date. The Fed is making nice, some of the fear is gone for awhile and Monday and Tuesday should be very good days. Look like time to play catch up and burn old shorty.

    Sentiment: Strong Buy

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    • Shorts don't care about the dividend. The stock drops by the dividend amount on ex-day. It adjusts for it. Thus the dividend does not mean anything to the shorts. As long as the stock keeps dropping due to rising rates - they make money. If that reverses.. and rates move back lower... well.. Shorts will start to lose and will cover.. because if rates stabilize, just stabilizing will allow for dividends to bombard shorts.. and hurt them.. So its a momentum trade. If the momentum slows and rates stabilize its time for them to exit the short trade. I do hope rates stabilize here and perhaps move lower due to the following:

      * inflation at 1.5% and falling
      *All asset prices in decline as of late
      *european interest rates going up because American interest rates going up
      *china facing banking crisis
      * global economies slowing, Real unemployment still 13.9 percent because lots of people had previous given up looking for jobs and they will come back to look again.
      * fed economy estimates way too optimistic given inflation and global outlook
      * even if fed stops all purchases by June next year - they will still buy about 450b worth of mbs during that time.
      * many new global banks will fill void for fed purchases as there is large demand for mortgage paper.
      * every 5-7 years we have a crisis that causes the economy to slump, time is close for another major recession within the next two years. Markets think in risk on or risk off very quickly. A sharp drop in rates to 2 percent not out of the question. Wild 70 bp swings happen a lot in the past.

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