Seeking Alpha

AllStreets

AllStreets
Send Message
View as an RSS Feed
View AllStreets' Comments BY TICKER:
Latest  |  Highest rated
  • Feed Your Family With These 4 Monthly Paying REITs [View article]
    Brad, thanks for another helpful article. I'm surprised you included a newcomer like ORC but left out AGNC, JMI and OAKS, all monthly paying mortgage REITs.
    Apr 25, 2015. 03:05 PM | 1 Like Like |Link to Comment
  • The Costs Of Deflations: A Historical Perspective [View article]
    Well said!

    "...we are fighting a new disease with false ancient prescriptions for an entirely different disease." Wonderful phrase.

    What's really needed is a higher equilibrium of output via real wage and income inflation for the middle and lower income tiers, but that's not in the immediate financial interest of the powers that be. You cannot raise the equilibrium output by just stimulating over-investment via QE and zero rates when the demand is inadequate because of deflated incomes, although reduced household debt servicing certainly does help. New money will just compete for existing assets. Ben's helicopters never flew much over Main Street. Too bad aggressive fiscal policy for the middle and lower classes is always off the table these last few decades. Tax cuts or, perhaps, guaranteed minimum income indexed to inflation? Where's George McGovern when we need him?
    Apr 20, 2015. 08:01 AM | Likes Like |Link to Comment
  • Oil: What Does Stronger Oil Mean For Storage And Tanker Rates? [View article]
    Thanks for an illuminating article.
    Apr 20, 2015. 07:41 AM | Likes Like |Link to Comment
  • The Housing Market: Myth Vs. Reality [View article]
    In 1991 Q3 the delinquency rate on residential mortgages was 3.36%. It dropped almost continuously and bottomed in 1994 Q4 at 1.39%. From there it gradually rose to 3.08% in 2007 Q4, and then it rose sharply to 11.27% in 2010 Q1. It held in the 10%'s through 2012 Q4 and then has dropped gradually to 6.63% in 2014 Q4. That's still double the peak rate in 1991 Q3, and almost five times the trough rate of 1.39% in 1994 Q4. That is anything but a healthy housing market. Meanwhile, beginning in 2014 the legacy 10-year interest-only first mortgages and home equity loans from 2004-2007 have begun to go into 20-year full amortization (or faster) with payments more than doubling. I'm talking prime loans and Alt-A loans, not subprime. So, here we go again with delinquency and default problems and the default rates could go up again along with distressed inventory.

    In 2006 a consortium of the Fed, all federal bank regulators and the state mortgage regulators got together and effectively closed down all subprime and Alt-A lending with strict new "guidance" to banks and mortgage lenders (oh, and they didn't bother to regulate the usurious adjusted interest rates on existing subprime mortgages). That led directly to the subprime crisis, the housing crisis, the disappearance of all subprime lenders within six months, the bankruptcy of Lehman (who owned the largest Alt-A lender Aurora), and the financial crisis. Soon home prices crashed and therefore, the home equity loans by banks were all under water. Really nice job by institutions which are commanded by statute to protect banks and promote a healthy economy.

    As long as the regulators continue to forbid any first lien mortgage lending based solely on credit and collateral (e.g. Alt-A no ratio up to a mere 70% LTV), the housing market will remain in a straight jacket. Ben Bernanke was not kidding when he said he couldn't get a home loan without a job; credit, collateral, assets or LTV didn't matter. No job, sorry, no loan. Slightly too high a debt ratio, no loan. High assets, sterling credit and excellent collateral are no longer sufficient. However, you can still get an FHA 97.5% LTV loan with a 620 credit score, almost no assets and any job, if the debt ratio works. Got it?
    Apr 12, 2015. 09:32 AM | 2 Likes Like |Link to Comment
  • American Capital Agency: You Are Next [View article]
    I've been commenting for months that the problem with fixed rate mREITs has been a significantly flattening yield curve since December 2014 so that yield spreads have been declining and so have core earnings. For mREITs that have been heavily hedged against rising long rates that means their book values haven't grown much throughout the bond rally or may have shrunk.

    However, you say "Bankruptcies will be coming for some of these companies." Huh? mREITs are still earning positive yield spread. When bonds rally and long rates tick down, the book values of MBSs go up not down, unless they've over-hedged long rates (ARR and JMI). If long rates go up, book value drops for those with light hedges against long rates, but the spread widens for new investments. Much depends on how an mREIT hedges its MBS. But bankruptcy? You must be expecting a flat or inverted yield curve for a very long time due to dropping long rates and MBS over hedged against price drops while the opposite happens. Wouldn't it take quite some time for AGNC's book value of 25.73 to drop to 0? Nevertheless, it is likely that core earnings and stock prices will erode if the yield curve keeps flattening.
    Apr 12, 2015. 08:40 AM | 9 Likes Like |Link to Comment
  • It Takes Courage To Not Run With The Bull [View article]
    "Conceptually, investing is a very simple task; buy when an asset is cheap and sell the asset when it is rich."

    Actually, for many of us, that's not investing, it's trading or speculating, which are both fine and valid for some folks at some times, but are very different activities than investing. To me, investing is acquiring assets that provide ongoing income indefinitely via interest, dividends or distributions (trusts and MLPs) with no expectation of ever selling unless superior prospects are found, or a problem develops to impair the income. There are many such securities available today at prices well below their record high prices or valuations and at fair prices or lower by certain reckonings. The high levels of stock price averages merely reflects the reach for a better source of income while the safest debt securities pay too little yield and too few investors feel any urgency to sell. For those afraid of stock averages there are good alternatives such as preferred stocks with high yields and which usually trade close to par prices, or one can hedge prices of all or part of holdings of other types.
    Apr 12, 2015. 05:49 AM | 2 Likes Like |Link to Comment
  • The Economy: Boom! Boom. Boom? [View article]
    I note that ZIRP has been great for investment spending, stock buybacks, carry trades and business refinances, but has done much too little for consumers. A few have been able to refinance mortgages, and adjusted rates on old ARMs are very low, but household debt-to-income ratios have remained very high, credit card rates are at all time highs for most folks, and there have been too few homeowners able to refinance because of (1) much stricter mortgage guidelines, (2) the disappearance of 90% CLTV home equity lending, (3) the Fed-orchestrated shutdown of all subprime and Alt A lenders, and (4) lack of home equity (HARP is closed to those who don't happen to have a loan now owned by Fannie Mae or Freddie Mac, such as most Alt-A and subprime borrowers).
    Apr 11, 2015. 02:20 PM | Likes Like |Link to Comment
  • 5 Common Errors Of A Dividend Growth Forecast [View article]
    Thanks for a very educational and useful article. You've provided real life examples of why "past performance is no guarantee of future performance" and, in fact, have shown that future performance is unlikely to be as good as past performance.

    On another note, for a pure income oriented portion of a portfolio I have been interested in high yield securities such as mREITs, BDCs, CEFs, some MLPs, preferred stocks, and their related ETFs. Many have high current yields, 8-10% or more, but very low growth rates and even significant dividend fluctuations downward at times. I was interested in how realized income compares to that from DGI stocks. I ran a spreadsheet that shows that a portfolio with a YOC of 9% but 0% CAGR in dividend growth vastly outperforms a DGI Portfolio that has a 4% current yield and 7% average dividend growth rate. For example, after 10 years the High Yield Portfolio has paid $90% YOC whereas the DGI Portfolio has paid 55.3% YOC. The catch is that the high yield portfolio is more likely to have some securities that have larger significant drops in dividends and market prices (e.g. mREITs a la 2007-2009). If such securities are replaced it's likely there will be significant capital loss from those positions. However, that effect can be offset by diversified reinvestment of at least some of the dividends into high yield securities. Also, the results of reinvestment of the high yield dividends will be much better than the result of reinvesting the DGI dividends into typical DGI securities with similar lower yields and growth rates.
    Apr 11, 2015. 01:45 PM | Likes Like |Link to Comment
  • $48k Per Year With A Half A Million Portfolio [View article]
    Actually, BDCs shuld benefit when short rates rise because most have floating rate assets. mREITs should benefit assuming the rise is accompanied by an expansion of the 10/2-year yield spread. REITs will suffer, and I suspect that overvalued DGI stocks with low yields will suffer. Not too sure about CEFs since they're a mixed bag of stock and bond investments.
    Apr 11, 2015. 08:33 AM | 6 Likes Like |Link to Comment
  • Deal reached on Iran's nuclear program [View news story]
    Shiite-led Iran is an ally now, although one had hoped it first would have become a secular democracy with separation of church and state. Bush and Cheney decided to throw our lot in with Shiites and fight Sunnis who are now disrupting so many places around the world. They kicked out the Sunni government In Iraq and put Shiites in power. They got Iran in the deal, probably unwittingly. Now we help Shiites from Iraq and Iran fight Sunni ISIL in Iraq and Syria. Radical Sunnis are a bigger problem than Iran, and Sunni Saudia Arabia supports them. An effective nuclear deal with Iran won't do anything to resolve the centuries-old religious and tribal rivalries in the Middle East, but it might strengthen the fight against radical Sunnis and help prevent another ill-advised military adventure by the next Republican administration.
    Apr 3, 2015. 07:40 AM | 3 Likes Like |Link to Comment
  • Breitburn Energy Cuts Distribution Again, Why I'm Sticking With Linn Energy [View article]
    There's too much focus on the spot price of oil. E&P companies should trade with some valuation for the long term return based on their properties and expertise in developing new wells and acquiring new properties. They seem to be trading more like royalty trusts these days. Perhaps the market is giving too much weight to the spot price and debt issues and not enough to the longer term values.
    Apr 1, 2015. 05:33 PM | Likes Like |Link to Comment
  • Yemen And Unintended Consequences - Oil's New Battleground [View article]
    One more instance of the corrosive effect that religion has had on peace through the ages. Bush handed Iraq to the Shiites, and we fight with them against ISIL, so I guess we stand with the Shiites. In general, the Sunnis are the most violent and have the most anti-human rights traditions. Saudis formd Al Qaeda and Saudi princes funded 9/11. ISIL are Sunnis. Perhaps it's time to ditch Saudia Arabia and align with Iran; maybe it's easier to control Iran's policy toward Israel that way. With access to Iraqi, Kurdish and Iranian oil, we don't need no stinkin Saud.
    Mar 31, 2015. 09:07 AM | Likes Like |Link to Comment
  • What A Deal With Iran Really Means For Oil [View article]
    Thanks for an interesting article. However you should be more careful about the facts when speaking for all the American people: "The Republican house and senate, just elected, feel they have a strong mandate to govern in the name of the people. Republicans are against this deal, it is not popular with the American people..." A CNN poll March 13-15 found 68% in favor of negotiations with Iran. Admittedly, hardly anybody knows the details of what's in the plan, so it's hard to know what the opinion would be about a deal itself, so you can't know either.
    Mar 30, 2015. 02:26 PM | 13 Likes Like |Link to Comment
  • A Day In The Life [View article]
    Things tend to regress to a mean, DGI stock prices included, although I readily admit that for many of the top DGI stocks the dividends don't tend to regress at all even if the stock price does. However, I fear that DGI investors, if not stock investors in general, may have been lulled into a dangerous sense of complacency about the future based on the recent past. I guess that's why bull markets tend to last 4-5 years before no. 2 hits the fan. I suspect there may be more than a few DGI investors who have no dry powder now and may be shocked when their overvalued Aristocrats and Champions hit the skids in the next correction or bear market. I hope their dividend incomes get them through the next period of paper capital losses and they don't abandon ship at the bottom. My best wishes for successful investments for all.
    Mar 29, 2015. 11:42 PM | 1 Like Like |Link to Comment
  • The Puzzling Case Of Spreads Is Resolved: Western Asset Mortgage Capital [View article]
    Thanks for a couple of interesting articles about WMC. I became interested also and switched investment from NLY to WMC, and that's worked well so far. To cover the many unknowns I hedge capital value at times with puts.
    Mar 29, 2015. 07:30 PM | 1 Like Like |Link to Comment
COMMENTS STATS
1,183 Comments
1,719 Likes