Acting on panic never helps investors, but it's still a good idea to question why you're really buying individual investments.
Consider mortgage security firm Annaly Capital Management
Here at the Motley Fool, we like to consider both the good and bad sides of an investment, so in this article, so I'm highlighting three of the main bearish arguments on Annaly Capital Management today. Be sure to read the bullish side, as well, and then weigh in with your own comments below, or rate Annaly Capital Management in CAPS.
1. Soaring delinquencies
While Annaly's investments are backed by the government, investor-shunned Fannie Mae
2. Interest rate risk
While the low interest rate environment is good for Annaly's business, and has also helped banks such as JPMorgan
3. High leverage
Annaly's recent leverage is the lowest it's been in recent years, but it still sat at a hefty 5.6 to 1 at the end of the first quarter. With generally more frequent interest rate adjustments on its borrowings than on its investments, the added effects of leverage during periods of interest rate swings could pose additional risk on its bottom line. It may also be more than some CAPS members are willing to stomach, so soon after the last meltdown in a highly leveraged environment.
To see details of what CAPS members are saying now about Annaly Capital Management, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.
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Fool contributor Dave Mock can think of three good reasons to celebrate the end of the school year. He owns no shares of companies mentioned here. The Fool's disclosure policy had a lot of fun on grandma's feather bed.