Good pricing action today allowed me to reduce my REIT exposure. American Capital Agency (AGNC) traded clinedose to 52 weeks high. I explained my reasons for getting out of REITs in my previous post. In short, there are two major threats to mortgage REITs: higher interest rates and lower mortgage rates. Former is not on the horizon yet, REITs can borrow cheap. But lower mortgage rates are reality. And mortgage deal between states, federal government and banks allows many more people to refinance, reducing borrowing costs.
My strategic decision at this point: get out of REITs. Very high yields can be resolved two ways: either stock price goes up, or dividend payment go down. Judging by latest development, latter option is mubh more likely to materialize.
Today I sold part of my AGNC position.
Disclosure: I am long AGNC, NLY.
Additional disclosure: Positions can change any time.