Picking Up Bargains

November 13, 2012

Last night’s question from Dan led to a fairly technical and complicated answer about the current state of the mREIT sector.

Again without giving specific investment advice (since I have no idea what your specific circumstances are), I thought I’d put into words a little technical primer on picking up bargains when the market gods are slamming these stocks.

I’ll try to describe how I pick them, leaving how my emotional and financial state affects my order of choice for another time.  Just be aware that your own ability to sleep at night, or need for cash, can radically change your order of preference among these stocks.  Right now, I’d say the fear factor has driven a lot of small investors to sell, simply because they don’t like the sickening feeling of seeing red pixels on their screen full of stock prices. Read the rest of this entry »


A Baby Step

October 25, 2012

Transparency in the mortgage bond market just got a baby step in the right direction.

Yesterday the SEC approved FINRA’s plan to tell the world where some Agency MBS and small business loan (SBA only) bonds are trading.  FINRA is the brokerage industry’s self-regulator, so the fact that it’s only a baby step is no surprise.

I’m reminded of the scene five years ago, when short sellers and CDS “insurance” buyers used complicit or ignorant reporters and the opacity of the structured securities markets to turbo charge their profits.

In fact, they made the mortgage meltdown worse through their actions. Read the rest of this entry »

Blue Light Specials

October 15, 2012

This morning in the mREIT aisle the spinning blue light attracted alert shoppers.  In particular, seveal amREITs completed what looks like an “air pocket” end to a week-long trend of dramatically lower prices.

As always, there are both fundamental and emotional reasons for the price movements, but today’s early plunge looks like a mini-capitulation.

Among the stocks I watch, AGNC traded briefly under $30 a share, and ANH traded to just a penny higher than $6.  Those were the “screaming buys” in my opinion, but NLY flirted with the $15 level, and TWO traded solidly under $11, albeit briefly.

MITT also traded down, but I haven’t got a feel for its price action yet, though I admire the bond-picking talents at Angelo Gordon.

But don’t get too upset that you missed the sale.

I’ll explain after the break. Read the rest of this entry »

Biggest Loser and Biggest Winner

December 6, 2011

As promised, I will describe my biggest mistake of the year.  As a balance, I’ll include the biggest winner.

First the bad news.

This is bad mostly because it was supposed to be a safe place to “park” some bucks for a couple of months until I needed them later in the year.  Instead, it morphed into a position that will take a year or more to climb back into the black, if ever.

It was also a harsh reminder that the game is often rigged against the unwashed retail investors. Read the rest of this entry »

E Pluribus Corporatum

October 10, 2011

I have my nomination for the highest return investment of the past three years — the hundreds of millions the financial industry spent on lobbyists who take their percentage and then pass lots of it along in heavily string-attached political contributions.

The fascinating part of this whole game is how the game itself derails any attempt to reform it.  By the way, the corruption-maintenance by the system only partially includes the nightly fund-raising cocktail parties in Washington where the standard lobbyist contribution is $5,000.  Read the rest of this entry »

Is ECRI really that good?

November 5, 2009

Economic Cycle Research Institute’s (ECRI) Weekly Economic Indicators have been known to move markets. Many people who look at the economy now including economists have a tough time sifting through all the sometimes conflicting crosscurrents. Many of those who have finally come down on the bullish side will cite the ECRI forecast and its splendid record as a key point in reaching their decision. It is really hard to argue with that.

In a way ECRI’s WLI encapsulates all the favorite tools of traditional forecasters in one concise forecast. And why shouldn’t they enjoy the influence they have? Their record of forecasting post war recessions is superlative, and if anyone need any reminding, they were real early in correctly forecasting the economic turnaround we now appear to be having.

Success of course spurs interest. My latest interest started to grow when their indicators started showing some mixed readings a few weeks ago. At the same time I began to see some signs myself that this expansion was having some problems and therefore it was time to start looking for signs of a possible downstroke in the economy.

Read the rest of this entry »

Hello, world

October 14, 2009

Show me a cash flow, and I’ll build you a bond. That was my mantra when I was an early practitioner of the art I called “financial engineering.” Basically, I thought of ways to cut up cash flows so they could be customized for clients like banks, insurance companies and pension funds.

It all started with mortgages, and the earliest “engineered” bonds were simple sequential CMO’s (Collateralized Mortgage Obligations). We called a deal A,B,C,D when the principle from the mortgage borrowers first paid off class A, then B, then C and then D.

Read the rest of this entry »