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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ild who wrote (67842)2/14/2001 11:41:50 PM
From: pater tenebrarum  Read Replies (1) of 436258
 
i don't THINK so...imo agency paper is implicitly guaranteed by the tax payer - the alternative is unthinkable. i hold shares in a company trading in those things myself (NLY) mostly because it pays a generous dividend and has proven to be adept at dealing with difficult interest rate environments.

that doesn't mean there won't ever be a financial accident involving the GSE's...they are after all among the most highly leveraged companies on earth, and the real estate bubble they have helped foster is probably close to tanking. but before their debt goes down the drain, the Fed will rather monetize it. it already accepts benchmark agency paper in its repo operations, presumably preparatory to the inevitable bailout that's going to become necessary one day.

one thing about shorting the broad market: make sure you elect a reasonable stop-out point beforehand. and stick to it...
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