Not a market expert or a great investor but trying to become a good and robust investor 😀
So what am I investing these days?
These days, I am quite worried about a potential crash. Well, we had a 20% drop last year and I think that might be just a start-
So how do I deal with this? Well, take your money out. Grab profits. No one went broke taking profits.
My other strategy is to invest in high yield mortgage REITs. I am invested in Annaly Capital (NLY), New Residential Investment Corp (NRZ), and AGNC (AGNC). They are all yield about 12%. NLY is the king of mortgage REITs and they are quite stable. AGNC is Ok..NRZ is newer and uses less leverage than AGNC and NLY. All three trade below book value so there is margin of safety.
I expect that the mortgage REITs will be fine as long as interest rates don’t move to violently. The Fed said that it may slow down the interest rate hikes so that is already good. Also, all three REITs seem to be reasonably good at hedging-
Also, Trump is unlikely to reform Fannie and Freddie so the mortgage market should be stable for some time.
For the time horizon, I expect to hold on to the mortgage REITs for 3-5 years or until I find better ideas.
I am willing to take price drops (-15%) given the long time horizon-
I may sell if the they rise in value too quickly (20%+). NRZ is having a nice run but far from +20% run yet.
Overall, I sleep well without worrying about the mortgage REIT positions.
In sum, I like high yield mortgage REITs and will hold on to them for some time.
As always do your own due diligence.
Happy and prosperous investing!
Do your own due diligence 😀