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American Capital Agency Corp. Message Board

  • dr_klumps dr_klumps Sep 2, 2013 3:40 PM Flag

    I saw this Warning on Two of the Worst Mortgage REIT's

    WARNING: These Housing REIT Stocks Will Crush You - Strong Sell Signal
    Housing-Market / US Housing Aug 28, 2013 - 11:48 AM GMT
    By: Money_Morning

    Robert Hsu writes: Log in to your brokerage account... Call your broker... Request a plan prospectus from your pension administrator... Jump online and review the holdings in your "target retirement" funds, ETFs, variable annuities...

    Do whatever it takes to find out - today - how much exposure you have to real estate investment trusts (REITs), and mortgage REITs in particular. Then get rid of as many of them as you can.
    The Market Vectors Mortgage REIT ETF (MORT) is down 24% in less than five months. And a number of its components are down more than 30%.
    But it's going to get worse. A lot worse. And that's why I'm issuing a warning, because practically every "properly diversified" portfolio in America cashes these REIT checks.
    Many people depend on them.
    This is dangerous, especially when two of the most widely held mortgage REITs also happen to be two of the worst.
    To be sure, aside from the one (big) exception you'll see today, a longtime high-yield darling is about to get crushed...
    The REIT Spoiler
    You can pin this one on the U.S. Federal Reserve, too...
    Thanks largely to its pernicious tinkering of monetary policy - first via artificially low interest rates and then via direct injection of capital into the financial system to the tune of $85 billion per month of direct bond buying ($45 billion specifically spent on mortgage-backed securities) - the Fed has created an environment in which interest rates are destined to rise.
    In fact, the mere mention by Ben Bernanke back in May that the Fed will soon "taper" its bond-buying program now has caused interest rates, as measured by the benchmark 10-year Treasury Note, to rise to their highest levels in more than two years.

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