I never look at buy recommendations. I don't trust these people. I don't trust what motivates them. The only conclusions you can trust are your own if you put enough time in to make sure they are valid.
You buy mREITSs when interest rates are high and are about to decline. You sell when interest rates are low and about to increase. That means you should have sold. The smart money saw this coming and sold already. It can only get worse for now.
They always buy when the BV is higher than the stock price. They either do that or borrow less to reduce the leverage ratio. This comes from money they get for loans that were paid off. Basically it means they are reducing the size of their loan portfolio.
Most people who post on yahoo should not be investing in individual stocks. Most people are in over their heads. I see it every day when I read these message boards. What I see are people investing based on what they want to be true rather than what is actually true. It is like the mentality of a Democrat. They look at life the way they would want it to be rather than the way it is.
You can't do something simply because it worked once before. Every situation is unique and one has to account for the difference in circumstances.
When I don't understand a stock and don't want to take the time to understand it then I just move on and pass it by. But it is clear to me that most people use over simplified concepts to make decisions. Granted we all do that at first as we learn about something and some of that is required as we are getting introduced to something new but eventually one needs to become knowledgeable enough to justify a hold within a few months. I don't see that happening in most cases. It is as if past performance is all they need to know and nothing else and understanding what is likely to happen in the future as conditions change is too esoteric to consider. If someone finds that to be too esoteric then they are surely in over their head.
Pretty much everyone is in over their head when they first start investing and maybe that is what I am seeing, which is the know nothing newbies. But somehow I don’t think that this is the case as I sense a degree of stubbornness that I do not associate with people who are eager to learn but rather more like people who think they know it but know it wrong. When I was new I did not offer advice about things that I did not understand and I asked questions. I find it ridiculous that people talk about things they understand little about and in so doing get others to lose money.
People don't invest based on what the book value was, they invest on what the book value will be in the future. It is always about the future because that is when you sell. It is pointless to use today's book value as a criteria if the book value is expected to be half of that a year from now and you plan to hold for a year.
So are you saying that someone else makes poor people poor? In a country that offers free grade school education, medicade, and many other benefits, I find it hard to believe that anyone else other than the poor can be blamed for their life choices.
The reality is that there are no poor people in the US anymore. It is just a terminology used by liberals to make people believe that there is a need that has not been fulfilled. No one is starving. No one lives in homes with dirt floors. No one is without electricity or plumbing. That was a 100 years ago. These circumstances don't exist anymore.
Every time we solve all these problems all liberals do is raise the bar to make it so that with a new definition of what is poor that there are poor people again. But if you keep doing that then the problem can never be solved. The poor people of today have more than the middle class of 100 years ago. Heck, they have more than I had as a child and I thought I was doing fine.
The whole situation has gotten absurd. You can't even take is serious anymore. Its a joke.
That is not the most relevant point. It is what they do with those dollars after they sell the bonds because if they exchange them for Yuan it will cause a devaluation of the dollar relative to the Yuan. This will cause all Chinese made products to increase in price and thus it will cause inflation for poor people as they buy those cheap products because that is all they can afford to buy. But this would change what they can afford.
Well said. You hit the nail on the head. But it seems that China is now realizing that at the current rate of printing dollars that it will make cause their current dollar holdings to become worthless. They are holding trillions.
Since China makes most of the stuff that poor people buy we don't get inflation here in the US unless prices of products from China increase. If China stops buying our treasuries then I am assuming that they don't want to hold them either and thus they will have to exchange them. This will drive down the value of the dollar vs the Yuan and cause manufacturing jobs to return to the US.
However it will also cause us to have inflation as the price of Chinese products increase. But it is not the kind of inflation you would want to control with interest rates. But it seems most many don't understand that. They still look at the US economic as if 1960s economic theories still apply in a global economy which they don't.
The only inflation you try to reduce with higher interest rates is inflation from an overheated labor market that is causing inflation because wages are increasing as laborers become harder to find. But this will not be the case. Prices will go up but it will take a while for those jobs to return to the US so the labor market will not be over heated. It will be inflation caused by China throwing in the towel on trying to keep their Yuan low in value with respect to the dollar. I hope they have someone smart enough to realize this. I'm not so sure that they do.
I'm not sure how this will affect real estate prices because this is not normal inflation. I can't figure out why the increasing of retail prices would increase demand for homes. In fact it might do the opposite in that there will be less money left over for the mortgage payment. If wages go up then it might offset this but then wages won't go up unless there is a shortage of labor which won't happen for a long while.
How to hedge?
I tend to agree. Anyone who still owns AGNC after this much of a decline is not smart enough to make enough money that would allow them to save $800k. Only the dummies are still holding AGNC. And dummies don't make a lot of money because they have nothing to offer anyone who would have a reason to pay them that much. Smart people are in high demand, dummies are in low demand. Salaries are based on supply and demand.
Granted there are a few exceptions like a charismatic actress with great looks who gets paid money for her ability to sell movies to people who want to look at her. But these people are so few that they are not even worth considering. No one pays anyone more than they have to and if you are dumb they won't have to pay you very much at all because there are hoards of dumb people willing to work that will accept low pay.
I once knew someone whose rich husband died and she got all his money. She was pretty dense but had looks. She got onto the stock market lost just about everything in 5 about years doing really dumb things like doubling down as a stock was declining in price. Now she is poor. I'm convinced if you gave her more money she would lose it all again.
It seems to me that you don't understand the historical behavior of interest rate cycles because if you did you wouldn't be hoping for anything. You would know.
I like what AGNCP had done. It seems stable. However there must be a news event that would cause the stock price to tank but it is not clear what that is other than looking like they are going to go under. So until I know who the survivors are at the interest rate peak I will not chance being one of these people who post that they are going back to work because they lost their savings on mREITs.
Since I am wrong then I recommend that you ignore what I say and buy a boat load of AGNC. Please do that.
There are many reasons for an against. The main reason is the economy. Remember that retired people can't earn interest so they are exhausting their savings accounts. That cannot be ignored either because these people vote.
The economy grew at 3.6% in Q3, which was a surprise, so the Fed will have justification for not tapering. Yellen will look like a flake of she opposes tapering because the economic data does not support such a stand. She will have to support tapering. This means treasuries will have to go up and AGNCs book value will go down along with its stock price.
It seems that insiders bet wrong. But them they often do. I have seen insiders buy stocks at $35 that eventually went down to $4. It means nothing. Insiders tend to be overly optimistic about their own creations. They want them succeed and that causes them to be biased about the future. I have listened to so many CEOs that talk up a companies future as it was on the path to bankruptcy.