With PPI down minus point two percent, the deflationary scene augers for no Fed rate hikes for the immediate, mid term, long term, and now until the 12th of never term. You'd think that would make the market happy. But the Saudi's are helping to crash the price of oil, either to cripple our shale oil industry, cripple Russia, or manifest an "it's all good" philosophy, since at the pump in Saudi--gas is about 25 cents a gallon.
Never mind UPS and FEDEX and the airlines just saw billions in cost go away, the market is busy selling winners and losers. A couple more blips and we're in correction territory, the pundits will yell healthy, and I will yell I have the cure for hemorrhoids right over here at the end of this red hot poker.
When and if we fall through the old low, I will start nibbling till I double down. We'll all see what ARR talks about around the 2-5 Jan time frame. Needless to say, without a change in hedging or a secondary, I expect $0. 135 to be the quarterly income, with them either maintaining the 5 cent dividend by returning capital, or, by lowering the divvy to 4.5 pennies a month, which is break even for them, and actually might be a plus for the stock.
Looks like oil's decline has precipitated the new "domino" theory for stocks. Folks seem to be complacent when all sectors move forward together, split them up into winners and losers, the entire market panics.
Le'ts see if the 11th of Dec gives us the bounce we used to get day after trouncing.
I would tell nomadinx to double down, I would tell you to go to hell. But since you bought at $7, you're already there.
Staying the course with the same plan. Tomorrow, another nickel disappears as the divvy is paid. I squirrel it away with the other forty five cents, to help defray the course of my double down.
Another minus a dime day? Mebbe. I wait predatorily, my double down is at $3.66, but the cringe may not fortell the binge until the first week in January, when next quarter's divvy is announced. I wait until I see a bounce.
Take your meds. In the tossup between losing some money and one's mind, I take losing some money.
You've already made your choice.
The whole market slips on oil, and whatta surprise. Oil cheapens, costs go down world wide, but we're so use to seeing oil as a bellweather, we forgot it's an anchor around the neck of the market.
Being better protected is increasing your hedge just in case irates go up, it isn't " doing better in the sense of more revenue. On the contrary, you are spending MORE revenue to hedge, instead of giving it to shareholders. That's what hedging does, it is a cost of doing business, an insurance policy if rates go higher.
It's fourth grade math, and a different definition of "doing so much better". You need to get past the headlines.
US stocks are sliding because oil is tumbling, and joesixpac can't tell that main street and wall street are inexplicably tied by lower costs. By end of year, hedge fund managers are going to have to reposition, and once again like last year, 85% in trouble are juggling like crazy.
MREITS will reach critical mass sooner than later--and I mean upward, because the carry trade as the rest of the world buys US bonds on a "currency play" of US dollars doing better than their own currency?--those folks will keep rates low and supply the stability that will make ARR look smarter than those others who haven't hedged.
I'm looking for ARR to test the bottom at $3.66 and have changed my double down scenario to that number, as that is where we overrreacted to last year for just the same reasons as now, but were badly positioned to take the brunt of continued low interest rates.
without a secondary to expand the portfolio, or a revisit to 30 year paper. But listen kids, the interest rate pops are fifty fifty June 2015, 100% by March 2016, if you already are positioned to take advantage of your current position, would you be jiggering around with a year old setup to be hedged against interest rate creep?
The same reason PHK does better than PHT, a smaller bond fund with a consistently better portfolio. It has the juice, lessor names suffer, it sure isn't reality.
I said the same thing last couple weeks and lowered my double down from 3.86 to 3.72, and I am sure two years ago somebody said the same thing at $7--let us know when you have a point.
They buy new assets equal to the secondary, which then throws off income, which you get 90% thereof. Secondaries don't pay bills, the assets bought with them do, and they are instantly accretive.
They already aren't keeping the five cent dividend. They have 13.5 pennies to distribute from income, and take 1.5 pennies from return of capital, as they've stated past couple quarters. A secondary may need offering, to raise cash, to invest and keep the dividend flowing at 15%. Secondaries in MREITS do not dilute, but, since most folks don't know that, the stock may take a hit when that announcement happens, probably end of December first quarter '15. Other than reentering the 30 year market, expanding leverage, there isn't any other way mathematically to do the job.
One final note, Friday the 5th of December, all MREITS took big hits, and ARR was the least damaged of the group to include the one's you mentioned. Again, the decrease of divvy to a 4.5 penny a month scenario? It's already baked in, and other MREITS will be offering single digit returns when ARR is at 12% rate of return. "Nuf said.
The big news was the quality of jobs has increased, probably for the first time in about seven years. Wages are still at a creep though, so those pundits I see on the yahoo financial funny papers touting a Fed change to the language in December expect the Grinch this XMAS--it's not going to happen. On the other hand, January is looking more and more like the month for language changes.
Meantime Europe is getting on the currency devaluation QE bandwagon, as if a 15% decline in their currencies vis a vis the US isn't enough to kick start their economies. And gas and oil will continue to get cheaper weighing on the inflation picture, as if cancer of the currency were a good thing.
The lesson learned here? You can't have half the world loosening, while the other half tightens, without huge imbalances. We're either all Austrian, or Keynsian, to have effect worldwide. You may not like the effect, but at least we all move in the same direction.
It is what it is, however, and it still is no environment for silver and gold. Yet.
In the meantime, after seven lean years in the retail arena, it's looking like a C+ B- year for the economy. That will get you a diploma, but not the big job offers you get if you're magna cum quickly.