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Invesco Mortgage Capital Inc. Message Board

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  • marklibera marklibera Aug 26, 2011 2:52 PM Flag

    My viewpoint...

    steve, there are many things to consider, including the general tone of the market and the economic stats that affect it and the company's fundamentals. I start from the point of view that failing to pay attention to the technicals got me in a position to have to try to mitigate a larger loss than if I had recognized the risk earlier when the technicals turned down. The mark down of the hedge positions was a fundamental issue (and one that most people couldn't foresee), but the technicals showed that the market was very concerned by it after it was announced. That being said, to me the chart looks like $19.50 is the upside and downside risk is around $15.50. Of course, technical support and resistance levels are only good if they hold. They are just guides, not final destinations.

    I'm not sure if the stock is going to run up prior to the dividend announcement because I think there is now doubt about whether the payment will be the same amount. No one can tell how the stock will react to the announcement, whether the amount stays the same or is reduced. To me, that's an additional risk that you are playing by staying in the stock at that time; if you can't accept the loss associated with that risk, then you need to buy insurance.

    You could choose to try to grind this out through a combination of small additional purchases, stop losses and covered call writing. I probably won't be doing that.

    Instead, I'll probably be looking to exit on a bounce. The goal is to stay in the game to play again, perhaps when things are clearer, both at the company and with the economy. I don't think you have to worry about the stock running away to alltime highs. good luck

 
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