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  • How To Profit From Homebuilders Priced For Perfection [View article]
    Hi Jake - To be fair...the title was an SA editor change. We do mention in the article that many analysts feel that the sector is priced to perfection...which is true. If orders come in below expectations, there will definitely be some volatility to the downside.

    We tend to agree with you about the potential upside, which is why we wouldn't take a short position in the stocks. That said, a healthy pullback in the sector would be good to see after the recent run up. If the put options that we mention in the article are exercised it would probably be a good thing for the investor (great cost basis)...
    Jan 18 02:10 PM | 1 Like Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Well said, searcher...
    Jan 18 01:54 PM | 1 Like Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    johnny - it takes alot of "patience" to withstand a 30-50% drawdown...how many other securities are you holding with that type of historical performance? Hopefully not too many...

    Love the picture, BTW...
    Jan 18 01:48 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Alan2a - Agree to a certain extent about the income rationale...but the flaw is that CIM is not a "solid company". If you were making the income argument about ABT, T, or MO its a totally different story...
    Jan 18 01:41 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Hi Bill -

    (a) It's a bit of a stretch to say that CIM is a way to play the European debt debacle. If that is your thesis, then you would be better off just shorting the Euro.

    (b) If you look closely at the insider buying...the nominal dollar value of the buys is extremely small. Certainly not something to hang your hat on.

    (c) If you are comfortable with the mREIT space, AGNC is safer bet with a higher dividend yield.
    Jan 18 12:42 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Hi Carousel - Thanks for the comment. With a dividend yield of 12% it is going to take you 2 years to get back to break even! If you are really in it for the dividend, there are safer investments out there to generate income. Why risk your capital in CIM?

    If you are comfortable with the mREIT space...why not sell CIM and buy AGNC (19.9% dividend yield)?
    Jan 18 12:36 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Hi Michael - you are absolutely correct. If you have the discipline to "fold" when you should, then you won't fall into the traps described above...
    Jan 18 12:13 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Hi Billie - we are still waiting for you to enlighten us with your CIM research...you talk a big game, but you have never come to the table with facts...
    Jan 18 12:08 PM | Likes Like |Link to Comment
  • What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
    Thanks for the comment, Jonathan. Most CIM investors share your "break-even" mindset and that was the main reason for the article. You have fallen into the "loss aversion" trap described above. You are not alone though...we all fall into this trap from time to time...we are human!

    It shouldn't matter whether or not you break even on a specific stock. Instead, you should focus on your portfolio as a whole. Cut your losers short and focus on new profitable investments for your portfolio and you will make back your CIM losses in no time...
    Jan 18 11:45 AM | Likes Like |Link to Comment
  • Income Strategy Debate: Buy And Hold Vs. Market Timing [View article]
    Hi - MakotoUeno. You pose a fair question.

    Yes, we think it is a very fair to lump the put selling strategy into the market timing bucket. The essence of "market timing" is knowing when to buy, sell, or hold. Any well-structured market timing strategy will use limit and stop loss orders to enter and exit the market. With the put selling strategy, you are making the conscious choice not to buy the stock at current levels based on market conditions...how is that not "market timing"?

    The beauty of the put selling strategy is that you don't have to sacrifice current income even though you are waiting for a better price on the stock...
    Jan 17 02:06 PM | Likes Like |Link to Comment
  • Income Strategy Debate: Buy And Hold Vs. Market Timing [View article]
    Thanks for the comments, TonyP4. We agree, a well structured covered call strategy is also a great risk-reducing strategy that generates stable income in any market.
    Jan 17 12:54 PM | Likes Like |Link to Comment
  • As The European Outlook Worsens, Keep These Low-Beta Dividend Stocks On Your Radar [View article]
    Stocknut2 - We took some chips off the table (including ED) toward the end of the year as we feel a near term pullback is imminent. ED had a great run in 2011, with a total return of over 25%. Our "buy zone" for re-entry is $54.00-$55.00.

    That said, we still love the company and we are currently short long-dated ED puts at the $55 strike. We view this as a win-win trade for 2012. If the stock stays above $55, we will collect a 6% premium (which higher that the current dividend yield)...and if the option is exercised, our cost basis in the stock will be under $52 (a 12% discount to the current price)...
    Jan 16 11:09 PM | Likes Like |Link to Comment
  • Creating A Synthetic Dividend For Stingy Cash Rich Companies [View article]
    From the recent 10-K...
    Jan 11 02:44 PM | Likes Like |Link to Comment
  • Creating A Synthetic Dividend For Stingy Cash Rich Companies [View article]
    Hi Rhianni32 - Selling covered calls is a good strategy in a down market to generate additional income, but it offers limited protection in a down market. Conversely, as you can see from the examples in the article, a well structured put selling strategy gives you a very high margin of safety when prices decline. In addition, we don't mind if our puts are called since we only sell puts on stocks that we would like to own at a cheaper price...
    Jan 11 01:37 PM | Likes Like |Link to Comment
  • Avoiding Annaly Capital [View article]
    Agreed, madev1138...NLY should continue to perform well while interest rates remain low.

    NLY management has slowly been reducing its leverage (see chart in the article below) which has been the main driver of the dividend reduction. While lower leverage leads to lower profits (and dividends), it also reduces risk. We view this as a positive risk management technique, which is why we are still bullish on NLY.

    http://seekingalpha.co...
    Dec 22 09:23 AM | 6 Likes Like |Link to Comment
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