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American Capital Agency Corp. Message Board

alw59saw 13 posts  |  Last Activity: Jan 22, 2016 11:07 AM Member since: May 18, 2004
  • Reply to

    How can this be?

    by wirtz24184 Jan 19, 2016 7:48 PM
    alw59saw alw59saw Jan 22, 2016 11:07 AM Flag

    I lived in Houston 1969-1971 with low oil prices (before the oil shortage in 1973-74); people who bought houses in Houston's oil district for $250K saw their house value drop to $75K to $80K. However, other parts of the city had reasonably good housing prices. Point is, that oil pain was localized and not wide-spread.

    Today, I live in Raleigh, NC, and we aren't feeling any economic dip. To the contrary, we've had a housing and building boom here for 10 years that is still going strong. With that has come jobs in high-tech and retail sectors.

    Looking ahead, Government spending for R&D and military, which has been restrained by Obama in favor of domestic programs, has got to pick up (and with it, jobs) or face becoming a second-rate World Power. If that (second-rate World Power) happens, the USA will feel more attacks at home and at USA installations abroad. North Korea won't hold back (not to mention terrorist activities by ISIS and others).

  • Reply to

    How can this be?

    by wirtz24184 Jan 19, 2016 7:48 PM
    alw59saw alw59saw Jan 21, 2016 10:28 AM Flag

    Interesting that you say that we're headed into another recession. I haven't heard any economists or Wall Street analysts talk about a recession around the corner. Could be --- our economy never has been robust coming out of the last recession --- but I haven't seen the signs of one yet. If it does happen, there will be many "deers-in-the-headlights" investers caught buying at the wrong time.

  • Reply to

    How can this be?

    by wirtz24184 Jan 19, 2016 7:48 PM
    alw59saw alw59saw Jan 21, 2016 1:30 AM Flag

    Analysts are blaming the dropping price of oil for the market's doldrums ... panic in the streets causes the ink to run red. If one looks at history, it's easy to see that USA's economic growth rode the back of low oil prices in the 30's and 40's and again in the 50's and 60's up until 1973. Why? Because cheap oil means lower manufacturing and operating costs, hence lower (and more competitive) prices. Lower costs means not only higher profits for all, but adds jobs since companies are more willing to hire workers.

    But today's investors and analysts can't see that, haven't learned their history lessons; they look only at the surface of the market (lower oil p[rices means that Exxon-Mobil's, Shell, BP and other oil companies' profits will be down). Those who fail to learn and remember the lessons of history are doomed to repeat those mistakes.

    But, it's foolish to go against the market, even if the market is wrong --- the market is ALWAYS right. Smart investors saw this coming and sold off early; then went the other way and shorted stocks, making profit as stock prices fell. The bottom of all this selling --- and panic --- will end one day; that's the time to buy again.

    Bear markets typically run 9 to 18 months; market corrections (less than 25% drop from recent highs) run a few weeks to a few months. The end is usually (but not always) signaled by a huge one-day drop in leading indexes. Today saw the DOW 30 drop more than 500 points in a couple hours --- that could be the signal of a bottom. Look at the S&P500 index and you'll see that today it equaled its two previous lows (~1800 mid-day). That's more confirmation of a bottom or near-bottom of this market; with a correction of 10% - 12% (typical of corrections).

    Be cautious, but be ready to buy again.

  • Reply to

    Headlines: DOW plunges 200 pts at open

    by smoking_camel Jan 20, 2016 10:42 AM
    alw59saw alw59saw Jan 20, 2016 5:28 PM Flag

    To stay listed on any of the major exchanges, the closing stock price has to be $1 or greater for 30 consecutive trading days. If the stock price falls below $1 for that period, the Exchange sends a "cure" letter to the company owning the stock, giving them 6 months to correct the problem (e.g., do a Reverse Split; improve their balance sheet so investors bid up the price with more confidence, etc.). If the Company cannot fix the problem (or is unwilling to do so), the Exchange --- at its sole option --- can delist the stock, or give the company more time to get the stock price above $1.

    In the case of URRE stock, the Exchange gave that Company an extension of 6 months TWICE. URI parent Company finally did a reverse split, so the stock is still listed.

  • Reply to

    NYMT longs, listen to Wells Fargo

    by helpme_hanna Jan 16, 2016 8:24 AM
    alw59saw alw59saw Jan 19, 2016 4:18 PM Flag

    In 2008, there was a good reason why NYMT hit $2. But 2016 isn't 2008; the only reason for this (low) price is P A N I C. Panicky markets ALWAYS give a buying opportunity. Buy Burma Shave.

  • Reply to

    Is anyone concerned about--

    by silerjacko22 Jan 14, 2016 10:31 AM
    alw59saw alw59saw Jan 15, 2016 4:10 PM Flag

    Never listen to Politicians --- they'll mis-lead you every time. Do your own due-diligence analysis and judge for yourself.

  • Reply to

    Is anyone concerned about--

    by silerjacko22 Jan 14, 2016 10:31 AM
    alw59saw alw59saw Jan 15, 2016 4:09 PM Flag

    Beg to differ with you about NYMT not going anywhere in the long term (see my reply above). All you need to do is hold on to the shares you have and add more shares AFTER market bottom. NYMT can maintain a somewhat lower dividend indefinitely so that, with yields like ~20%, share price will rise again to $5, then $6 and higher as yield-minded investors bid up share price to rake in a generous dividend.

  • Reply to

    Is anyone concerned about--

    by silerjacko22 Jan 14, 2016 10:31 AM
    alw59saw alw59saw Jan 15, 2016 4:03 PM Flag

    You've made an assumption that NYMT will borrow money from a lending institution --- they won't; instead they will sell more shares of NYMT to the market to raise the capital they need to but more mortgages with higher interest rates than those they now hold. Doing so by-passing the flat yield curve altogether so that narrowing yield spreads do not come into play for REITS.

    The ONLY thing that matters is the stock price that NYMT can get in a Secondary offering. It (SPO) won't happen in declining markets like the one we're in now --- pure panic. Once the bottom is made, NYMT's stock will rebound once earnings are posted and investors see that the dividend is safe (even if another cut is made to, say $0.20/share or maybe $0.18/share. I believe that a reduced dividend can be maintained indefinitely. Once investors see that, they will again bid up the shares of NYMT above its book values (we're waaaaay below book now).

    With share price once again rising and dividends paid regularly and stable, NYMT can issue an SPO and obtain a reasonable price for those secondary shares. From then on, it's all upward for share price and dividend increases.

  • Reply to

    Is anyone concerned about--

    by silerjacko22 Jan 14, 2016 10:31 AM
    alw59saw alw59saw Jan 14, 2016 9:12 PM Flag

    No reverse split needed; just the opposite, an SPO (secondary stock offering) is more likely to raise cash as mortgage interest rates rise. NYMT (like other REITS) will want to buy more higher-rate mortgages to increase their income, which will later on allow for a higher dividend payment. NYMT already has more than $400M in cash (according to last quarter's financial report) with which to buy higher-yield mortgages.

    It may seem odd, but rising mortgage interest rates is GOOD for REITS because they add more income when the REIT buys the higher-yield mortgages with its cash. If they don't have enough cash, then they issue more common stock in a secondary offering to raise the cash needed to purchase the higher-yield mortgages.

    Since REITS are required to pay out at least 90% of net income (to avoid paying income taxes), as income rises, so will the stock dividend. Eventually, the low yield mortgages of today will disappear as they mature, are refinanced, or sold leaving the higher-yield mortgages left in their portfolio. It will take time for this to happen but we are now at the base of "the mountain, looking up" as mortgage interest rates rise back to their 100-year norm of 6% or more.

    So, there should be no concern about an REIT going out of business --- that could only happen if ALL of the mortgagees defaulted at the same time, depriving the REIT of its income stream. How likely is that?

    NOW is THE time to be buying REIT stocks to lock-in big future dividend payments. If you buy now at or below $5 as your base cost for NYMT, you'll earn 15% - 20% now and even MORE later as NYMT's income stream increases as I've described above.

  • Ya should sold years ago! Nowhere for this lemon to go but down ... the drain.

  • Reply to

    Rising rates, makes being an MREIT harder

    by mardermj Jan 10, 2016 7:01 AM
    alw59saw alw59saw Jan 13, 2016 4:05 PM Flag

    Elementary Watson: REITS make their primary earnings from mortgage interest paid by homeowners whose properties titles the REIT holds. As mortgage interest rates increase, the REITS sell some low-interest properties to investors; issue Secondary stock offerings of company stock (SPO's); and liquidate other investment holdings --- all to raise cash to purchase new, higher interest rate properties. That changes the income mix from all low-interest paying properties to some low/some higher-interest paying properties.

    The bottom line is that the REITS increase their income steadily over a period of years that interest rates are increasing. Thus, as their income increases, they are able to pay higher dividends, which increases the value of the underlying stock.

    This is not new; it is how REITS have survived the ups and downs of the interest rate changes made by the FED and the mortgage markets for the past 100+ years.

  • Reply to

    Rising rates, makes being an MREIT harder

    by mardermj Jan 10, 2016 7:01 AM
    alw59saw alw59saw Jan 12, 2016 4:28 PM Flag

    Rising interest rates are better for MREITS, not harder; but people like you who make that claim encourage shareholders to sell rather than buy. It's no wonder NYMT is losing ground.

  • Reply to

    Quick question on Dividend.

    by robert15_40202 Nov 17, 2015 2:24 PM
    alw59saw alw59saw Dec 14, 2015 2:21 PM Flag

    Based on the 3rdQ earnings report ($0.20 net per share) and their tax requirement to distribute at least 90% of net earnings, I expect a reduction to 0.18 per share quarterly dividend ($0.72 per share annually). That appears to be sustainable, as it has for all of 2015 with quarterly net earnings of at least $0.20 per share in each quarter.

    NYMT can't continue to pay out quarterly $0.24 per share going forward with earnings of only $0.20 per share quarterly. In 2015, they sold off some equity holdings so that they had cash available to maintain a $0.24 dividend. Don't expect that to continue.

    Once the FED raises interest rates (either December 2015 of January 2016) mortgage interest rates will rise and NYMT (along with all the other REITS) can begin to acquire new mortgages at the higher rates, meaning their interest income and net earnings will rise. That makes the dividend solid and even possibly increase in years to come.

    Sentiment: Buy

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