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Avoid Annaly Capital For One Simple Reason...

|Includes: Annaly Capital Management, Inc. (NLY)

Here is the long term price chart of NLY:

When a stock makes a very long term downtrend, you need to ask why is this such a poor performer?

During this same time frame the stock market has been strong, despite the major setback of 2008-09.

What makes you think that future stock performance will be better than the past? What huge changes is the company making that gives you confidence that future earnings and dividends will be strong versus a very weak past?

If you invest in NLY, are you making a "bet" on changes to the interest rate structure, Fed policy? Without those changes, which are rather inpredictable, NLY may need to increase their risk profile, in order to maintain their dividend. How do you know what you are buying?

Avoid NLY unless you a very nimble, short term trader! Or unless you think you can predict interest rates moving favorably for NLY.

Note: The preferred shares of NLY are attractive, generating steady dividends, although these shares could decline sharply if NLY gets into financial trouble. I would suggest buying preferred shares only when the price is at par or below. I own preferred shares, "NLYPRC," acquired below par.

Disclosure: I am/we are long NLYPRC.

Additional disclosure: I do not own nor do I plan to buy any NLY, unless the price fell sharply below book value.