1) Back in late 2005, interest rates rose quickly and every mREIT earned less and less.
2) 2008 credit crisis: China is having one now. Their inter-bank over-night lending has skyrocketed to over 11%
3) The end of every QE was followed by a market correction
4) People expect a larger correction and selling now in the hopes of buying back lower. (Good luck with that.)
Retail investors are easily manipulated. We know that book value is going to take a hit -- both on the agency side and the non-agency side. The question is has IVR hedged its BV for the spike in mortgage rates?
Personally, I'm perfectly willing to hold this. But if things get too crazy like in 2011 when this went to under $14, I'll add more. (2011 allowed be to lower my cost basis to under $15. I would not mind adding again if this went to under $15. If not, I'll hold. If I did not already have a full position, I'd be looking to take a partial position here.)
mREITs are not for weak stomachs. The volitility has been large for several years -- easily $2 or $3 or more every year for the past several years. Nevertheless, it never fails that some people buy this at a high price (e.g. $19 or more) than "walk away" as soon as it drops by more than $1. It happens all the time. I've seen several posts such as "I'm out... I cannot take this anymore." That's unfortunate, especially when 6 or 12 months later the price recovers. IVR is well positioned fo higher interest rates. If anyone has doubts, i strongly recommend that they visit IVR's Web site and get the facts; not all mREITs are the same. Some will do just fine. Don't let headlines manipulate you.