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<\/a><\/p>\nMy friends argue these stocks are good because they have ultra-high dividend yields — between 9.5% and 22%. Even if the stocks fall a bit, they will still have the cushion of the high dividend yield. Hence, my friends argue they will still come out ahead. They also argue that these stocks do no fluctuate widely over time. Here’s the most popular one, Annaly, charted weekly:<\/p>\n
These companies own \u00a0real estate investments — of various ilks.<\/p>\n This is what\u00a0Annaly Capital Management (NLY)\u00a0does, according to its description on the Wall Street Journal’s site.<\/p>\n Annaly owns, manages and finances a portfolio of real estate related investment securities, including mortgage pass-through certificates, collateralized mortgage obligations (CMOs), agency callable debentures, and other securities representing interests in the obligations backed by pools of mortgage loans. The Company’s wholly owned subsidiaries offer real estate, asset management and other financial services. Fixed Income Discount Advisory Company (FIDAC) and Merganser Capital Management, Inc. (Merganser) manage a number of investment vehicles and separate accounts for which they earn fee income. The Company’s subsidiary, RCap Securities Inc. (RCap) operates as a broker-dealer.<\/p>\n I think \u00a0I understand most of it, though I’m having trouble with mortgage pass-through certificates.<\/p>\n Anworth is more in the business of government agency securities. Its description, courtesy the Wall Street Journal reads:<\/p>\n Anworth Mortgage Asset Corporation (Anworth) is in the business of investing primarily in United States agency mortgage-backed securities (MBS), which are obligations guaranteed by the United States government, such as Government National Mortgage Association (Ginnie Mae), or federally sponsored enterprises, such as Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac). At December 31, 2009, Anworth had total assets of $6.53 billion. The Agency MBS portfolio, consisting of $6.49 billion, was distributed as 25% adjustable-rate Agency MBS, 62% hybrid adjustable-rate Agency MBS, 13% fixed-rate Agency MBS and less than 1% agency floating-rate collateralized mortgage obligations (CMO). The Non-Agency MBS portfolio consisted of approximately $4.7 million of floating-rate CMOs.<\/p>\n Anworth sounds pretty safe. Aren’t Fannie Mae and Freddie Mac owned now 100% by the Federal Government? Further I can sort of understand Anworth’s financials. They earn money. They pay it out as dividends. It looks good.<\/p>\n Yet, I worry about real estate. I believe I can categorically say: If you bought a property — commercial or residential — in the past five years with 75% debt LTV (loan to value at the time), your equity is now basiccally worthless. In other words, you’ve lost 100% of your money.<\/p>\n Now I look at these things. They’re all paying dividends. That’s good. But what’s their future? Am I \u00a0likely to wake up one day and find that their earnings have dropped and they’ve stopped paying their dividends — as many of my commercial real estate syndicates have.<\/p>\n I look at their earnings statements. Most seem to be deducting provisions for screwed up real estate assets. But are those provisions enough? Frankly I have \u00a0no idea.<\/p>\n My friends suggest, in lieu of knowledge and in the face of great risk, diversify. Buy a bunch of them. But does spreading my risk around a bunch of \u00a0similar stocks cut it? Obviously no. \u00a0I do know that some of these stocks may be less risky than others. Some only dabble in government and semi-government (i.e. agency) guaranteed securities.<\/p>\n Anyone got thoughts on these companies? I’m still researching. It’s 4:00 AM. I got to get some sleep.<\/p>\n The Black Swan that\u00a0whacked\u00a0Australia. Black Swans are unpredictable. That’s why they’re Black Swans. Two days ago I “predicted” five Black Swans:<\/span><\/span><\/span><\/strong><\/p>\n 1. When sovereign wealth funds dump Euros. — Charlie Aitken, head of institutional dealing, Southern Cross Equities, Australia.<\/p>\n 2. When a country\u2019s bond auction fails. \u2014 Nassim Taleb, author of The Black Swan,<\/p>\n 3. Failure of a major bank, e.g. Citibank. — HN.<\/p>\n 4. Bankruptcy\/default of a major state, a major city or a major county. They\u2019re all pretty precarious. It won\u2019t take much to push one over the cliff. Think California.<\/p>\n 5. Another computer glitch on Wall Street. We\u2019ve had two big ones \u2014 1987 and last Thursday week.<\/p>\n I forgot the most obvious — namely when politicians, desperate for monies to salve their populist platforms, impose new, high taxes. In the U.S. we have new taxes in the health care reform bill and now a proposed new tax that would treat the investment gains of partners in hedge funds and private equity firms as ordinary income rather than as capital gains.<\/p>\n The nastiest tax is Australia’s proposed 40% \u00a0RSPT — Resources Super Profits Tax. Since the Australian government floated the idea a few weeks ago, Australia has taken a major hit. Its stockmarket has plummeted 21.5% — as reflected in EWA, which is the ETF of Australia’s largest companies.<\/p>\n Australia’s dollar has also dropped a horrendous 10% from 92 cents U.S. to 83 cents. <\/span><\/p>\n There is a good chance that the present Australian government lead by Kevin Rudd will be chucked out before the RSPT takes effect in 2012. In which case, Australia may be a good punt, especially if it gets much cheaper. \u00a0For now, stay away from Australia. <\/span><\/p>\n If you thought investing had suddenly become hard — what with\u00a0high frequency trading, stockmarket volatility, the uncertainty in banking assets, the sluggishness in employment recovery — it’s just become even harder with politician popularism, and all those new taxes they’re desperately creating.<\/span><\/p>\n I repeat: Do not borrow money to invest in anything today. Or at least think twice. And don’t borrow much. Remember the bank gets preference. One friend has already lost his house because of his excessive borrowing.<\/span><\/p>\n Intel gets on board, finally. Yes, it is true. Intel cannot deliver some of its most popular processors, especially the i7 which goes into laptops. Yes, it’s true Intel is ramping up production and beginning to deliver. Yes, its’ true. I’ll soon have my new Lenovo ThinkPad X201.<\/span><\/span><\/span><\/strong><\/span><\/p>\n In every disaster, there’s always a silver lining. During extensive conversations with Lenovo about “Where’s my laptop?” I learned that there are two i7 chips. One that’s faster, but delivers less battery life. One that’s slower, but delivers more battery life. Most Lenovo customers apparently want more battery life. I want more speed. When my new X201 laptop arrives, it will sport the faster i7. Yipee.<\/span><\/span><\/p>\n Nice compliment to Harry: The Intel salesman to Lenovo, a talented man called Dave Gerano, \u00a0likes the specs on my X201 so much he is buying himself the identical one. Double Yippee. He says I’ll get mine before he gets his. Triple Yippee.<\/span><\/span><\/p>\n Apologies to Joel Novak and all my readers. Some readers were offended that I shared this story. I’m offended that Mr. Novak, a dear friend of many, many years, has disappeared off the face of Mother Earth. Not a friendly act for a long-time friend, irrespective of whether he owes me money or not. In fact, had he explained that he was broke, I would have happily said, “Don’t worry about repaying the money. You’re my friend.” <\/span><\/span><\/span><\/strong><\/span><\/p>\n Shakespeare was right. Lend money. You lose the money and the friend.<\/span><\/span><\/span><\/strong><\/span><\/p>\n The curious thing about yesterday was it attracted more reader comments than any other subject. <\/span><\/span><\/span><\/strong><\/span><\/p>\n Packing Tips From Travel Pros. Roll all your clothes. You get more in than folding. I don’t know why. But you \u00a0do. \u00a0Watch\u00a0Ten Days in a Carry-on.<\/a><\/strong> <\/a><\/span><\/span>.<\/strong><\/p>\n Check. Check. Check. Whirlpool washers and dryers are the best. They work well and are well-designed. Maybe. The door on the washer opens to the left. The door on the dryer opens to the right. This means that you should install the washer on the left and the dryer on the right. This way you can move clothes easily form the washer to the dryer. If you can’t install the washer on the left ( like in our apartment), you’re screwed. You can buy an door reversal kit for $20 for the \u00a0dryer, but not for the washer. Now you’re only half-screwed. Check. Check. Check. The washing moves left to right, just as you read. I wonder if they make a different set \u00a0for Israel?<\/span><\/span><\/span><\/strong><\/p>\n The Dyson Animal vacuum sucks big-time. Muriel, my wonderful assistant, <\/span><\/span><\/span> <\/strong>bought and recommends the Dyson-Animal vacuum. She emails me, “the normal Dyson is Yellow Mine is Purple, which \u00a0is specifically made for people with pets. Our dog, Mack, an English Springer Spaniel sheds a lot.\u00a0I am so happy with my Dyson Animal. The motor is so powerful. It sucks the dust toward it before I even get to the spot where the dust actually is. It just sucks it up. It does such a good job on our hardwood floors and the rugs look great after I vacuum them. It swivels on a ball so I can maneuver it into all different spots. It has a wand that I can use for the stairs or moldings. It’s a bit heavy to carry up the stairs, but I leave that for husband Jerry.”<\/p>\n<\/a><\/p>\n<\/a><\/span><\/strong><\/p>\n