Mortgage Stock Price Drops Hold Profits For Some
Mortgage stock prices are dropping like a stone creating a huge profit opportunity. I wrote a post 10 months ago on my ActiveRain blog showing folks how to “short” mortgage stocks to bank these profits.
Since then a most mortgage stock prices have literally freefallen. Right after that post, Novastar’s stock (symbol: NFI) dropped 40% in one day down to about $15 a share. Today Novastar has dropped even further down to $2.08 another 60%.
If anyone had taken my advice to short this stock, they’d be rich. But it doesn’t end there…oh no. New Century stock (symbol: NEW), dropped to zero when they claimed bankruptcy last year. Accredited (symbol: LEND) mortgage stock has dropped to zero upon bankruptcy too. These huge mortgage stock drops…all the way to zero…would have made one even more.
All of these mortgage stocks dropped around $30 a share in about 5 months. If you shorted 10,000 shares of each, you’d be worth $600,000…over a half a million today! 20,000 shares…
$1,200,000…Now that’s becoming a millionaire the easy way.
Is this widespread mortgage stock slide over? Not by a long shot. There are a ton of other mortgage stock price declines to come and new home builder stocks that are dropping as much and as fast.
Don’t let this opportunity to profit from mortgage stock declines slip through your fingers.
Make up for any short falls in your retirement accounts by grabbing these investment opportunities when they appear. You will lose value in your home over the next few years..maybe as much as 40%. Shorting the home builder stock declines and mortgage stock declines could be a “hedge” for you to make up the loss.
Read that ActiveRain post and leave any comments on shorting any mortgage stock below. I’ll answer as best I can.
Do not pass “GO”, do not collect $200…short the mortgage stock arena and collect a lot more!
Look into to it today!
Rob K. Blake,
PS:All investments have risk. This is not an offer of securities or investment advice. Invest at your own risk. Seek advice from your investment and legal counsel before making any investments.
Blah..Blah…Blah
Author: Rob K. Blake
Published January 14, 2008
Modified March 20, 2008
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Doug,
Shorting stocks is no more difficult than going long. There are zillions of tutrorials on the web just type in “shorting stocks” into Google and start reading.
The class I tought at CFU was a little more complex. It was one use LEAPS, a little known “long term option” for lack of a better description to do my “shorting”. I get better leverage, higher rates of return, and can control bigger blocks of stock all with LEAPS.
Downside is not all companies trade LEAPS, but most of the big companies do…so when it comes to Fannie Mae or Countrywide…no problem.
Good Luck in your investing
May 1st, 2007 at 10:26 amRob, Shorting stocks is that the class you taught at the Free U? Is it to late,and what stocks are good canidates for shorting? How is it done?
March 31st, 2007 at 6:22 pmNEW YORK (CNNMoney.com) — Stock declines accelerated Tuesday afternoon, with investors bailing out amid ongoing worries about subprime mortgage lenders, a weak retail sales report and a further decline for the U.S. dollar.
Yeah, you called that one.
March 13th, 2007 at 12:31 pmSo start with 100 shares not 10,000!
Those were just examples…but you knew that.
There’s always those “glass half empty” folks, eh BMK?
March 12th, 2007 at 10:38 pmThe brokerage requires you put up some money before you can short. I think it is 50% margin. To short 10,000 shares, you will need a few hundred thousands $..
March 12th, 2007 at 10:27 pmJose,
I shorted these stocks back in Oct 2006. I’ve got annual return on Accredited of 68%, on New Centrury of 97% and Novastar of 96%!
Many of these companies will go bankrupt…some are calling for New Century to file BK in the next few days…
This isn’t risky…it’s a forgone conclusion. These companies are built on shaky products, with shaky (and shrinking cash flow) and now increasing regulator issues. That’s a short play if I’ve ever seen one.
With that said…it’s time to take the profits.
As they say in the market, “Pigs get fat, but hogs get slaughtered”.
Thanks for the comment
RKB
March 6th, 2007 at 1:45 pmI wouldn’t speak to soon, Rob.. shorting stock is risky. I thought along the same lines to short New Century and Accredited, but shares of both are up on the day and it looks like subprime as a whole is rebounding after the pounding it took yesterday and last week.
March 6th, 2007 at 1:27 pmLeave a Comment