Though true that the spread is important they have another tool in their bag too. It's just become unclear if they'll utilize it again. I personally think they will - maybe. I've owned this stock for a while and can remember much higher leverage ratios. If rates go up they could also up the leverage to keep earnings intact for awhile. Will they? I trust them to do so but I don't know if it will spoke too many people that don't fully understand their business. I wouldn't mind higher leverage because management has proven they know not only how to weather the worst situations but to come out smelling like roses. My greater concern is hyperinflation. In a normal cycle where the FED would raise rates they've proven their ability to still produce a decent return. But I can't imagine very good things happening if inflation gets rolling like in China and our FED raises rates substantially over time to deal with it. For now, I think the commodity bubble will deflate bring some relief and since housing is terrible there will be little pressure on the inflation side. Time will tell.
NLY's CEO is paid 20 million per annum to anticipate and do all that's possible to mitigate adverse rate differentials.
I'm sitting back and leaving it to him,
and his well-paid associates.
Thank you. I already have 2K shares of FTR. I was hoping NLY, as opposed to other REITs, had some sort of "magic bullet" that would stand up against interest rate increases. Unfortunately, there is no REIT, or for that much, any investment that has no risk. The risk NLY poses is too great for my age and financial situation. The extra income would have been nice.