But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Why income stocks may be risky
There has been a shift to real estate (VNQ), utilities (XLU), and consumer staple (XLP) stocks in 2014 because investors are looking for equities with bond like characteristics that give them a higher income.
The United States seems to be in the process of departing a regime of financial repression, i.e. one where a government takes measures to channel funds into its own debt.
The front-month Ginnie Mae TBAs were bid up as bonds rallied ten basis points. Ginnie Mae TBAs began the week at 106 18/32 and lost up just about 7 ticks to close at 106 11/32.
Fannie Mae MBS rallied a bit on a strong bond market. The Fannie Mae 4% TBA started the week at 105 21/32 and ended up giving up a couple ticks.
There could be a bit of a bid in the bond market due to the Ukrainian situation and the Israeli situation, but this is probably de minimus.
The 5.5% year-over-year gain puts the index back at July 2005 levels. The rate of price appreciation appears to be slowing.
Mortgage REIT investors have finally received a taste of what interest rate risk looks like over the past year. For most of the past 30 years, bonds have been a one-way bet.
Most corporations loathe cutting their dividend because of the message it sends to Wall Street, so volatile dividends are generally rare. For REITs, they’re a fact of life.
Because there’s no risk of principal loss—not to be confused with mark-to-market issues—the rate of return for mortgage-backed securities is generally low.
Dividend yield is typically why investors buy REITs in the first place. They tend to have much higher dividend yields than a typical S&P 500 stock.
CYS Investments (CYS) is a diversified agency mortgage REIT that invests all across the agency mortgage-backed security (or MBS) space.
The front-month Ginnie Mae TBAs were bid up as bonds rallied ten basis points. Ginnie Mae TBAs began the week at 106 1/32 and lost up just about 7/16 to close at 106 15/32.
Fannie Mae MBS rallied a bit on a strong bond market. The Fannie Mae 4% TBA started the week at 105 13/32 and ended up picking up about a quarter of a point.
The Malaysian jetliner that was shot down over Ukraine pushed bonds higher as well. It will probably have a limited impact on the economy overall.
This report will probably give the Fed some comfort. The Fed still fears deflation and will maintain ultra-low interest rates.
In many ways, it’s similar to the consumer confidence indices.
Non-QM loans would typically be useful for borrowers with sporadic income, but a large amount of assets.
In general, mortgage delinquencies are falling as home prices rise and the foreclosure pipeline clears.
There are also two different Ginnie Mae TBAs—Ginnie 1s and Ginnie 2s.
Fannie Mae MBS rallied a bit on a strong bond market.