Stocks and Trading Thread - Channeling your inner Mono

[Monoriu]

So let's say your family has some modest saving accounts, plus about 10k$ which could be used for the hope of a somewhat higher yield. Where to put it?

Assuming (and this is quite unlikely, sadly) that there is reasonable access from a Hungarian brokerage to foreign funds, would it make any sense to put half of it in a couple of emerging market funds, and the other half into the whatever-its-name gold ETF? Thinking along the lines of course that if there is yet another crash, people will flock to gold, while if there will be a consensus that teh depression is over, emerging markets would take off again?

Gold is a very high risk bet.  I won't put half my portfolio in that.  Emerging market funds are high risk too, so chances your portfolio will be extremely volatile.  Nothing wrong with that, if "high risk; high return" is what you're after. 

[Admiral Yi]

I had a little Christmas money to put in my IRA and ended up putting it in AT&T.  I figured we aren't going to see any more significant increase in prices for a while, so I browsed the list of high dividend stocks on E*Trade's stock suggestions.  The great majority were real estate investment trusts, which I know nothing about (but if anyone feels like explaining why so many are on a list of high dividend stocks, feel free).  6+% dividend yield on the AT&T.

[citizen k]

The great majority were real estate investment trusts, which I know nothing about (but if anyone feels like explaining why so many are on a list of high dividend stocks, feel free).  6+% dividend yield on the AT&T.

Why REITs Deserve Your Attention
Kevin Grewal, Contributor
10/09/09 - 09:30 AM EDT

NEW YORK (TheStreet) -- As the real estate market shows some signs of prosperity, real estate investment trusts have been drawing investor attention and for good reason.

At the commercial real estate level, REITs are attractive because they offer an opportunity to a debt market that banks, insurance companies and other financial institutions are not considering. A weak labor force, declines in consumer spending and other recessionary factors put pressure on income-producing properties and increased stress on the loans that these properties supported. In turn, this created an opportunity for REITs to lend to these income-property owners.

As for residential REITs, they are drawing attention because of their record-low prices. Some investors think that the worst has past for residential real estate and are looking to buy when prices are low. The trends in both commercial and residential REITs has enabled the iShares Dow Jones US Real Estate(IYR Quote) to reap the benefits. The ETF is up 90% from its March low of $22.21 to close at $42.21 on Thursday.

This attractiveness appears to be emerging globally as well. In fact, international REITs are drawing even more attention because they earn profits in foreign currencies and are enabling investors a new way to hedge a weakening dollar. As a result, the iShares FTSE/NAREIT Global ex-US(IFGL Quote) has more than doubled from its March low of $14.63 to close at $30.41 on Thursday.

When investing in these equities, keep in mind the inherent risks that are involved. A good way to mitigate these risks is through the implementation of an exit strategy, which tells investors specific price levels when an upward trend in equities could be coming to an end. Such an exit strategy can be found at www.SmartStops.net.

Written By Kevin Grewal in Laguna Niguel, Calif.

REITs With 15% Yields Grab Investors
Jake Lynch
07/22/09 - 02:00 AM EDT

Real estate investment trusts, or REITs, have suffered since the recession hit. But many investors threw out the babies with the bath water. Annaly Capital Management(NLY Quote) and MFA Financial(MFA Quote) are two misunderstood REITs that offer huge yields and are poised to rebound.

To further limit risk, consider gaining exposure to the two stocks through the First Trust Specialty Finance and Financial Opportunities(FGB Quote) closed-end fund or the Burnham Financial Services(BURKX Quote) mutual fund.

Annaly is a REIT that manages a portfolio of securities, including collateralized mortgage obligations, pass-through certificates and callable debentures. As the subprime mania seized the market, the stock was battered. It has fallen 15% since February 2008.

After posting a fourth-quarter loss of 95 cents a share, Annaly resumed profitability in the first quarter as net income rose 44% to $350 million despite a 10% drop in revenue. The operating margin remained exorbitant at 96%, and the net margin widened 28 percentage points to 48%. Like most REITs, Annaly's capital structure is skewed toward leverage, which is evident in its debt-to-equity ratio of 6.

The trust invests in mortgage-backed securities that have actual or implied AAA-ratings. By doing so, it minimizes credit risk. And the company generates above-average returns by leveraging its positions. Although that strategy sounds reminiscent of Bear Stearns or Lehman Brothers, it isn't. The company efficiently regulates risk. Its operating performance has been remarkably consistent during a period of financial tumult.

Annaly distributes income to shareholders through cash distributions. The yield is currently 15%, more than four times that of the S&P 500 Index. Mortgage-backed securities are still cheap because of investors' aversion to real estate and an effort by banks to purge their balance sheets of so-called toxic assets.

Annaly is seizing the opportunity to borrow at low rates and invest in undervalued securities. The downside to its stock is affordability. The shares have surged 22% in three months and now trade at an expensive price-to-earnings ratio of 20. But the high yield compensates for a costly share price.

MFA offers a similar story. It's a mortgage REIT specializing in hybrid and adjustable-rate mortgage-backed securities. But MFA, unlike Annaly, swallowed its major loss in the first quarter of 2008 and has since achieved four consecutive periods of earnings growth.

First-quarter revenue rose 28% to $132 million as the company swung to a net profit of $54 million, or 23 cents per share, from a loss of $86 million, or 61 cents per share, in the year-earlier period. The operating margin remained steady at 96% and the net margin stretched to 41%. The pitch is the same as Annaly, but MFA is cheaper. The stock trades at a price-to-earnings ratio under 7 and offers a 14% yield. TheStreet.com Ratings gives MFA a "hold" recommendation because it has a slightly weaker financial position.

[MadImmortalMan]

Nothing wrong with that, if "high risk; high return" is what you're after.

He's a fairly young guy. It's not an unreasonable strategy I'd say.

[Ed Anger]

I'm investing in canned goods and shotguns.

[HVC]

I'm investing in canned goods and shotguns.

hope you remembered to invest in some shells and can openers too

[Ed Anger]

I'm investing in canned goods and shotguns.

hope you remembered to invest in some shells and can openers too

The Brain Gremlin from gremlins II can't be wrong.

http://www.youtube.com/watch?v=-MBp4kL-rN8

[Grey Fox]

One of my funds is racking up 62% over 1 year.

Damn. It's -6.5% over 2 years, but I don't care, I wasnt there 2 years ago.

[Tamas]

Let's say I want to have an account abroad from where I want to buy ETFs, and as a result store a very significant amount of my savings there (basically, my family has enough wealth to the effect that a catastrophic run would "only" destroy my hopes of moving abroad, and not me personally. So I dont need at this point to keep a traditional savings account). Do you know any really big and reliable online-available companies?
Basically I want to sleep well knowing i can take my money back any time despite the different country thing. But also important: this way, could I avoid my country's 20% tax on my gains?

[Monoriu]

I don't know about Hungary, but my own experience is that it is very, very difficult to set up an offshore account.  Banks only do it for their most wealthy clients.  You may have a shot if you have US$1 million in liquid assets (i.e. not counting the equity in your primary residence).  But even that is no gurantee. 

[Tamas]

I don't know about Hungary, but my own experience is that it is very, very difficult to set up an offshore account.  Banks only do it for their most wealthy clients.  You may have a shot if you have US$1 million in liquid assets (i.e. not counting the equity in your primary residence).  But even that is no gurantee.

I already have a Swiss account with an investment bank I might end up reactivating that but they are getting suspicious like moving to an other office and shit.

I think I will just open a hungarian account and swallow the god damn taxes (they take half my income, then go ahead and take a fifth of what I make with the other half. Fucking thieves, the lot of them)

[Caliga]

I had a little Christmas money to put in my IRA and ended up putting it in AT&T.  I figured we aren't going to see any more significant increase in prices for a while, so I browsed the list of high dividend stocks on E*Trade's stock suggestions.  The great majority were real estate investment trusts, which I know nothing about (but if anyone feels like explaining why so many are on a list of high dividend stocks, feel free).  6+% dividend yield on the AT&T.

I've got some AT&T stock. 

I just had to do my taxes (Princesca works under 1099 so has to file early) and I only made $379 in dividends last year, so I may pick up more T.

Princesca used to work for a REIT in Boston.  I dunno why they would yield high dividends, but I do know what a REIT is.  Basically the invest money from shit like pension funds to buy (typically) commercial real estate.  She worked for AMB Property, which at the time owned warehouses all over the US.  IIRC they owned all the warehouses used by PeaPod and Homeruns... not sure if either one of them are still in business.  They also owned some strip malls and general distro centers.

[Admiral Yi]

AT&T went in the shitter right after I bought, so now's probably a good time to pick some up.

[Tamas]

Ok I will do this. I shall build an investment account (mostly) out of ETFs.
Mind you that I barely have enough funds to call the whole enterprise reasonable, but my plan is to adopt new sectors or buy more existing ones in my portfolio every couple of months or so.

My initial plan, along the lines which I shall do further research, is to put half the money into one or two US index ETFs like the SP500 one, as to give it a relatively solid base which should not tank in a heartbeat, but with some chance of a big spike upwards. As my money accumulates, I shall enlarge this part with other first-world index ETFs or more risk-averse industrial sectors.

The other half should be my high-risk stuff. For starters I am thinking about pulling off that emerging-markets-and-gold trick of mine I was contemplating.



Feel free and welcome to tear my ideas into tiny sorry-ass pieces.

[Admiral Yi]

Gold is a retard play.  The bubble will pop eventually, it's only a matter of time.

If I were you, with your cutting edge technology saavy, I would hunt down a small start up with a product that you think will be world beater.  Or as you technology types like to say, a "killer app."