Lower Lows, Lower Highs, a descending triangle as predicted.
Buy the regional banks like, Access National (AGNX) my fav. up over 400% in 5 years and this should average 35-50% gain a year for 10 years of rising interest rates. No brainer.
Short AGNC on any rallies, in 5 years this will be below $5, as the 10 yr treasury soars.
Its here and will be here as the dominos fall. Cash is the safest investment since January 2015, when I said to buy UUP, the dollar etf is up 6% for 6 months, should easily do 12% return. This is better than AGNC divvy of 12%. Remember, the 12 % divvy only covers half of the 25% capital loss.
YOU HAVE SOMETHING VERY DISTORTED IN YOUR VALUATION METHODOLOGY. Your terms, "value of the portfolio", "costs are down", "the gov. still guarantees the loans" are very general statements, not well defined. Your conclusion, why is this trading for 25% off book value and dropping.
You are an amateur, if you are a professional investor, and you have well defined decision criteria, you would see this is an excellent stock to short or hedge against bond losses by shorting AGNC. The stock asset mixed and other variables are positioned so that value goes down if rates rise and value goes down if rates drop. They have to stay the same in order not to loose, which is very unlikely. VERY VERY VERY GOOD SHORT.
You guys should look to my post over year ago, predicting a Holiday Crash, where some sovereignity like Greece would close banks and then the stock market for a Holiday, except on this holiday it will last weeks if not months and result in catastrophic losses.
Its "Klumps Five Year Rule" for investors. It states you get the most gain and it is safe for the first 5 years, after that you should get out and harvest your profit. If you violate this rule you increase your risk and lower your overall gain, which can go negative. You are better not owning these after five years or trading. My 5 year rule only covers the "BEST TIMES TO MAKE A PROFIT" with very minimal risks. My rule never said the would go bankrupt or close. I made my money in this over two year ago and went into small regional banks with now sport a 200% gain in 3 years.
I beg to disagree. I was preaching before it even was $36, I believe at $26 before it got to $36, that if this goes higher you get out. Check it out, I went over the history of M-REIT's, there are only good for 5 years after IPO or at bottom of easing cycle. I said you should only trade and get ready for the enormous losses from buying 2-3%, 30 year fixed mortgages and leveraging 10 to 1 to buy even more had to be the dumbest investment ever. Only someone looking at the current yield and nothing else would even touch this or someone trading. This was not suitable for an intermediate or long term investment. TBT is smoking.
A very large stock price crash, bringing the share price to .25 - .30 of book value would do it. You would see buyings come in. That would price in some of the negatives of FED FUND rate going to 4%. If inflation picks up like it appears, and goes over 4-5% a year, the FED FUND RATE will have to go to 6-8% or higher to reverse this pent up inflation pressure. Rents are rising double digits everywhere, labor is rising double digits, it is really smoking. Unemployment is making new lows. Turnover is skyrocketing both hourly and salaried jobs. The economy is smoking. I am surprised the FED didn't raise in June, this just puts more pressure or probability of bigger and faster increases in the future. Smokin.......really smoking now, everywhere you look.
My take, look at the regional small bank stocks. There balance sheets are loaded with 68-90% adjustable rate mortgages. Only the dumb M-REIT's were loading up on fixed rate 30 yr at record low interest rates.
Two ways to play this with cash. But TBT, short the treasuries. Look at the chart Yellen put out yesterday, it shows FED FUND rates will be 1-1.5% by year end 2015, 2.0-3.0% by year end 2016 and 3.0% - 4.0% by Jan 2017. In about 2.5 years, rates will be back to 4.0%, 1/2% variance.
The levered Agency Mortgage REIT's will be single digits, like Annally, except the will be low singles, like $1 - 2.
Inflation is moving up real nice, 0.4% in May, more than double the FED target. I checked the indicators, inflation is actually taking off. Wage inflation (expecially the lower wages) are going up 10-20%, with Walmart, McDonalds, Home Depot, Costco leading the pack. Also, rent paid, is skyrocketing. 1 br apartments renting for $800, rents rising to $1,100, over 30% increases in the big cities. The smaller towns about half that, 15-18%, occupancy is over 97%. Inflation may soar and the FED may be forced to Jack Rates back up to try and get ahead of the curve, right now they are two years behind. Or maybe they wanted this all along.....HYPER INFLATION, DOUBLE DIGITS. The FED FUND rate should equal the inflation rate. Hence if we go to 7-8% inflation in 2016, that 2.5-3.0% FED estimate may be way off for the FED FUND rate by a factor or 2.
Over next 12 months. How to play. Right now, there has been no buying conviction or boost up in stock price as the stock makes trends straight down. This indicates a long drawn out descending triangle. If there was any buying conviction of traders or investors, there would be strong moves up. But only more distribution comes in when price firms, enough to hold prices very steady down. I expect some support come in when it hits the IPO price of $15. If none comes in to form a bearish wick then, it is $10 sp in less than 2 years. Short term FED FUND rate will be 2% soon, money market accounts and short term money will be 2%, hence the spread compression and pressure will cause the divvy to be cut to 10 cents. Just my opinion, based on my humble experience in the mortgage and bank investment scene.
If you want some really good investment advice try my Bank Fund LLC, private only 4 investors out of Chicago website. Click on "New Issues", recent purchases or look at the 290+ total issues held, over 85% are small regional banks, buy these on dips, by the dollar UUP on dips and especially short the 10 and 20 year treasuries, buy TBT on the dips, anything under 50 on TBT is a gold mine.
After you read my downgrade six month earlier when AGNC hit 36, I said SCREAMING SELL at $36, when it tumbled to $33, I said SCREAMING SELL........look for it getting halved we are at the top of the mountain, anyway you turn is straight down.
Eighty six years ago, Babson College founder Roger Babson predicted the Crash of '29 and the Great Depression. Wall Street ridiculed his warnings but on September 29, 1929, they sadly came true. In Sept, 1929, the market just completed 10 straight years with virtually no correction. Our current market resembles the 1920's with 7 straight years without a correction. This guy looked like an idiot, every billionaire was bullish and believed it would go higher, in fact, he warned everyone publically since 1927, 2 whole years. In one year, I think you will look like a real smart investor when AGNC is down to $9.00 or less per share, paying 10 cents a month divvy.
"Sooner or later a crash is coming, and it may be terrific," Babson said, according to John Kenneth Galbraith in "The Great Crash 1929." Babson also said that "factories will shut down"¦men will be thrown out of work"¦the vicious circle will get in full swing and the result will be a serious business depression."
"...There may be a stampede for selling which will exceed anything that the Stock Exchange has ever witnessed," Babson warned, according to reports in the New York Times. "Wise are those investors who now get out of debt and reef their sails."
Babson made these remarks on September 5, 1929 during a speech to the Annual National Business Conference on the Babson College campus.
News of his prediction -- received on Wall Street by mid-afternoon " caused the market to retreat by about 3%. This decline in the market is known as the "Babson Break."
Get into small regional bank stocks, my friend. AGNC is in a two year down trend, at the end of two years this will be near $10. Remember my prediction 3 years ago, when AGNC hit new high over $36, I said in this was the TOP of a bullish interest rate cycle trend and the top of the MOUNTAIN, anyway you turn you go down, back in 2012, and I said in 2 years AGNC will be trading at half of $36. The same prediction goes for next 2 years, AGNC will be trading for half of 19-20 or $9.50 -10.00. Annaly will be down to $4.00 -5.00. Why subject yourself to this, why not double your money in a bank stock like ALLY trading at .75 times BV, and will be growing earings 10-20% per year for the next 3-5 years. This is the reverse of "Zero Percent" or "QE", this is called the INVERSE OF QE, or "Rising Rates Forever".. Enjoy the next bull market in bank stocks. I should become close to a billionaire on this boom boom time in small regional bank stocks.
Management's number one goal is to keep book value steady, or increase it. They don't care about the divvy, they get paid on assets under management. If they think they could float an IPO to double assets under management, they could care less if the dividend gets cut in half, they will rationalize it was destined to happen and we can grow faster by getting bigger. They only care about what puts money in their pocket, THEIR COMMISSION or percentage of assets under management. Go get an education in how Mortgage REIT's are run and for who's benefit.
This is not the time to buy. The recent descending triangles are telling you that something is wrong and stock value is going down. Very poor fundamentals in the areas they are in. Enable has not produced, in fact way under what was anticipated. Then the weather turned on them, a perfect storm. A then now even more bad new, 6 rate hikes from the FED. The FED will announce their schedule of 6 - 8 rate hikes, everyone is hoping for the low end of the range, but 6 hikes at .25% is 1.50%, but the past history shows the FED raises .50% half the time and .25% half the time, hend, .25, .50, .25, .50, .25, .50 = 2.25%. I believe they will do the same as before, past patterns have been tested and proven. I think CNP may find support in 13-15 area with all this rate hike and the intentional slowness to normalization will cause very little buying.
You have no idea what you are in. I suggest you get into a fund and don't do your own analysis or selection. You should have been in bank stocks back in 2013 and still be going into them to play the dramatic interest rate hikes coming. You have no concept of what you are doing based on your statement above. You seem to be a yield chaser not an investor.
I am here. Sorry about not putting in time here, but life is good here in Chicago. Going to Blackhawks game tonight for the Stanley Cup. GO BLACKHAWKS.
They agency's are loosing their insurance. The government is getting out of the insurance business, this was on the horizon, it is starting to happen, YIELDS WILL SOAR.
Not going to happen, you should sell or short on any strength. Read this on Ginnie Mae's
Ginnie Mae TBAs get slammed with Fannie Mae TBAs
The ten-year bond yield, which you can trade through the iShares 20+ Year Treasury Bond ETF (TLT), rose 29 basis points last week. Ginnie Mae TBAs gave up about a point and half, similar to what Fannie Mae TBAs did.
American Capital Agency discussed the changes in mortgage insurance premiums on its earnings conference call. Ordinarily, it doesn’t buy Ginnie Mae TBAs. However, these securities sold off significantly on the changes to mortgage insurance premiums. This is one reason Ginnie Mae TBAs have been outperforming Fannie Mae TBAs. That being said, AGNC has been unwinding its position in Ginnie Mae TBAs, and that change could account for the underperformance.
I forgot, the short of a lifetime was German Bunds, a few months ago. The next on the list is LEVERED AGENCY MORTGAGE REIT'S. This is very equivalent to short Mortgage Banks back in 2006-2007, HUGE FORTUNES WILL BE MADE.