THIS IS NOT INVESTMENT ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN
With the financial sector having strenghened considerably in the past 18 months, I believe it will again serve as a refuge during broad based consolidations. Today's broad (but not deep) sell off provides some evidence in support of this thesis. Take a look at the performance of AFF, ISF, INZ, NWpC, RBSpL, AEH, GEA, GEC, TAYCP, (which not only held ground but gained) and all the other bank and insurance junior debt and trust preferred in the portfolio. Where else can risk averse, yield hungry investors go and still get a 6% return? Treasuries and cd's pay nothing.
The recent appreciation of this sector has made yield hunting therein difficult. As a consequence, I am looking into other sectors including real estate. As you know, I am a big fan of Annaly (NLY). I also like its sister company Chimera (CIM). Unlike NLY, CIM takes some top line risk by investing in non government guaranteed mortgages. Due to some timing issues that were explained in the conference call this week, CIM missed Wall Street's projections causing some knee jerk punishment. It found solid support at $4 which prompted me to add to my position at $4.02 which equates to a 17% yield on the dividend. I have also initiated positions in the preferreds of Northstar Realty Finance, a hands-on commercial real estate mortgage REIT. They both pay a 10% dividend. I like Northstar so much I may buy some common which is paying 9% currently. Note, REIT dividends do not qualify for 15% treatment. I buy them in my 401(k).
I FEAR THAT I AM BORING MY READERS. I GET LITTLE IF ANY FEEDBACK (WITH NOTABLE EXCEPTIONS). I DO NOT WANT TO SPAM YOU. IF YOU WANT TO TO CONTINUE TO RECEIVE THESE EMAILS PLEASE INDICATE BY RETURN EMAIL.
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