Most of my portfolio is now solidly shrugging off Yellen’s slip of the tongue. Our good bankster friends over at JPMorgan said it best – Yellen is fresh and inexperienced, and she still needs to learn how to speak without actually saying anything.
It will come. It will come.
Despite my state of shock at watching Yellen crack the market like an egg yesterday, I didn’t react. I want to watch a few more days before I make a move, even if they should lose me money. With a +14% year going, I have buffer room.
Now, the good word here is that CCJ and BAS are both moving higher. I suspect HCLP will join in soon as well (that position can be rewarded a little breather, it’s come a long way). The energy themes are solid and intact.
The bad side of the coin is that fear/reality of higher interest rates is going to just ravish the REIT and associated housing space. Check out VNQ over a five day period, and you can almost sink the cracking point up with Yellen’s comments. My current position AEC is breaking down again this morning, and an old position MAA is following.
This has to be treaded carefully. If you’re juggling garbage like NLY, I’d say you’re one four day panic away from another round of 30% losses.
I’ve said well before today, back when I never imagined Yellen would spook interest rates higher, that I was interested in rebuying MAA. This is sort of a blessing in that regards. I’d venture a guess that long term damage to multifamily REITs from higher interest rates will hover somewhere between “negligible” and “not damaging, actually positive”.
But well before that point, there will probably be a lot of indiscriminate selling from emotionally driven fund managers. The climax of that, if it should materialize, is the buying opportunity.
Between then and now, it’s important to keep a wary eye on reform efforts to Fannie and Freddie. There’s been some “bipartisan chatter”. Mortgage origination is >70% dominated by the government backed mortgage giants, and the entire housing market is totally dependent on them. A poorly thought out reform effort could rain chaos. But there’s no sense even having a discussion about that just yet. First things first, interest rates.
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I do hold core position here:
*the Lucifer trades or dancing with the devil..uh~huh. posting both entries over on the fan~tabulous Sir Raul’s blog, I do believe(?)
12/03/2013 YOU BOUGHT
AGNC AMERICAN CAP AGY CORP COM
Price: $19.928
and..
12/06/2013 YOU BOUGHT
NLY ANNALY CAPITAL MANAGEMENT INC COM
Price: $9.75
capturing both dividends for multiple years while trading around core positions.
not to shabby..
AGNC: Annualized Dividend Yield 11.78%
NLY: Annualized Dividend Yield 10.76%
*approaching Ex. Div date on both(late March)
Nice work on the expedient buys. But with NLY specifically, keep in mind you’re being saved a lot of despair because your timeframe is still short. On a 5 year basis, the NLY trade has been a big money loser. People were betting the high cash payout would be worth it in a low yield environment, but the company’s balance sheet is awful.
If you had held from 2009, you’d be sitting on around $10 a share in dividends. Seems impressive, but you’d also have an unrealized $7 a share loss. That’s a 16%, 5 year gain for trying to actively handle nuclear waste. Definitely not worth it.
And that is contingent on collecting those high, early year dividends. If you bought later, as the dividend started to fall fast and hard, you’re most likely underwater.
On a long enough time frame, NLY is going to sink everyone holding it.
In your spare time here are some Classic Gotham clips..just because(?)
http://youtu.be/d85gkOXeXG4
Yes..
They are just for trading around those Ex. dividends dates. They use to trade like clockwork both on run up Ex. Div date and sell off promptly after.
Not as consistent these days. I have no problem cutting both.
Guy who started NLY died
http://www.bloomberg.com/news/2012-10-21/annaly-says-michael-farrell-dies-after-cancer-diagnosed.html
and the company has drastically changed direction… drastically.
What? Fuck no it hasn’t.
In 2013, the company had over $1 trillion notional value of repurchase agreements with just one body. That’s TRILLION with a “T”.
Those agreements averaged out to barely over $10 billion in operational cash flow. But the company is so up to its elbows in financial paperwork soup, they’re using twelve zero accounting to make basically average profits.
That’s absurd. The entire balance sheet is a swamp of ridiculously complicated transactions.
Too tricky by half.
too good Sooz
The Cape Crusader clips or the trades?
Thanks, gorby..
😉
Cape crusader
Everything I believed of my stocks this morning, it is now the opposite.
REITs running higher, everything else sucking.
What a supreme joke upon my person.
Mr Cain, never doubt Socialism again. Mr Toad is really an old woman. A golfer is really the president. The tape is whatever they say it is. Carry on, using the silver to cure Dr Copper of the bad case of the clap that the transgender openly straight homo has. Is not fantasy world awesome?
Off to learn of American history from the Somalian maid my fantasy family hired. At least she needs to know some to get a rainbow card. Green sounds bigoted. Rainbow is the universal color of horseshit.
Late night with the crystal meth, Ironbird?
😉 )))
Nice. That was exactly the point. One would have to be a tweeker to believe rates will be hiked.
*Because of a booming economy. Other forces could force it, obviously.
Love to read a full fundie form your person on $NLY- only write on one of your
pissed off days
WMT was the tell on a booming economy. If junior”s pac man(video game) can be exchanged for a case of Top Ramen? Then look out! Inflation and all that ripping economy stuff is right around the crack infested corner. Yep. Rates are going to the moon.