tag:blogger.com,1999:blog-8873274605868443396.post2824983813667834641..comments2023-07-15T03:26:50.506-04:00Comments on Fireside Finance: Home Sales in Full-Fledged Rout: Disaster Continueseternitushttp://www.blogger.com/profile/06839117255321330014noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8873274605868443396.post-34868846056878105482007-10-26T12:02:00.000-04:002007-10-26T12:02:00.000-04:00There are exceptions to every rule (maybe the valu...There are exceptions to every rule (maybe the value is just too compelling)... but...<BR/><BR/>As a general rule, unless you are a sophisticated investor, I'd steer clear of any mortgage-lenders right now. The downside is just too ugly and too likely to occur to jump in.<BR/><BR/>I (and most analysts out there) think housing is going to be ugly for quite some time... remember, people actually have to be able to afford (and want to pay for their) houses over the long-term now that the "housing ponzi scheme" is over. People were willing to be "house poor" because they believed that someone else in the pyramid scheme would buy their house for even more in 2 years and make them rich. What now? Consider what happens to housing (and the economy) when all these ARMs reset, especially given super-high energy costs... It's just going to squeeze people even more. You need to wait for a bit more clarity before jumping in...<BR/><BR/>There have got to be better places to put your money to work (similar upside potential, way less dicey on the downside.)<BR/><BR/>Other considerations:<BR/><BR/>First, as with any investment, you have to have detailed knowledge of what the company actually does and have a grasp for the dynamics of the business (ever try to read a bank financial statement? You could have a Ph.D. in finance and really not be able to figure out what is going on.) second, nobody wants "non-prime" paper anymore, so that profit machine is gone (like dead forever gone). You can't expect pure mortgage lenders to return to their former profitability any time soon.<BR/><BR/>Full Disclosure: <BR/>I own Newcastle Investment Corp (NCT)(A Mortgage REIT). <BR/><BR/>Mortgage REITs basically own bunches of mortgages. NCT has been thrown in with all of the rest of the mortgage REITs who own lots of subprime sludge, even though subprime amounts to less than 6% of their loan portfolio (actually, most of their loans are commercial, not residential), and they bought the subprime securities at super-steep discounts.<BR/><BR/>Given NCT's investment profile, I'll take the 19% yield, which compensates me quite nicely for the "mortgagey" risks that I mentioned above, thank you very much.eternitushttps://www.blogger.com/profile/06839117255321330014noreply@blogger.comtag:blogger.com,1999:blog-8873274605868443396.post-39248763460950391762007-10-26T09:52:00.000-04:002007-10-26T09:52:00.000-04:00With all of the weakness in the housing market, is...With all of the weakness in the housing market, is it now a good time to go bargain-hunting for mortgage-lending stocks? I mean - some of the mortgage lenders have solid business fundamentals...right Or am I wrong - is the mortgage lending business too bubble vulnerable?Anonymousnoreply@blogger.com