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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (15647)	9/26/1998 11:40:00 AM
From: tom pope	Read Replies (1) \| Respond to of 120523

If you take a look at CMO's 10Q, you'll probably find that a company like CMO would be negatively impacted by falling interest rates as lower rates lead to increased mortgage refinancings and prepayments of assets in CMO's portfolio. This was especially true in CMO's case because it had a significant portion of its assets in interest-only strips. The company says it has taken steps to hedge its assets against the possibility of continuing rate falls, so it may be working its way out of its problems. Thanks for the heads up on CMO. I owned it in the 20's, but had stopped following it beyond noting that it had been seriously beaten up. The action of the past two days, together with the increased volume, has to be a good sign. On the general question of the reaction of interest rate-sensitive stocks to a rate cut, it seems to me that it has to have been already priced into the price of the traditional interest rate-sensitive issues.