Comments on: Commingling of Asset Classes plus History Tells Us Not To Worry https://www.thebluecollarinvestor.com/commingling-of-asset-classes-plus-history-tells-us-not-to-worry/ Learn how to invest by selling stock options. Thu, 05 Jan 2012 20:47:26 +0000 hourly 1 By: Alan https://www.thebluecollarinvestor.com/commingling-of-asset-classes-plus-history-tells-us-not-to-worry/#comment-181 Wed, 08 Oct 2008 23:31:07 +0000 /blog/?p=251#comment-181 Recent email question regarding my article on corporate bonds:

Alan, what exactly is a (MBS)? do they have a name on the market? and how did these mortgages go from a bank or a mortgage broker to the financial institutions to be sold in the first place?
Tony

My reponse:

An MBS is a type of asset-backed security that is covered by a collection of mortgages. They are also referred to as “pass-through certificates”.
Individual mortgages are pooled, repackaged, and sold to the public as collateralized securities. They are issued by government agencies (Ginnie Mae, Fannie Mae, Freddie Mac) and represent an investor’s ownership in a mortgage pool and the cash flows arising from that pool. You are in essence lending money to a homebuyer and receiving principal and interest in return ususally in coupon form.

They are issued to “select” broker-dealers known as “fiscal agents” and are normally sold to institutional investors. They do trade in the secondary market exclusively in the OTC market (computerized markets) and sold in $25,000 and up increments.

The process is called “securitization” whereby an illiquid asset (mortgage) is converted to a liquid one like a bond (in this case a MBS).

Tony, that’s pretty much the extent of what I know about these securites. If any of my readers are considering investing in this arena I would contact someone with more expertise in the field.
Alan

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By: admin https://www.thebluecollarinvestor.com/commingling-of-asset-classes-plus-history-tells-us-not-to-worry/#comment-180 Mon, 06 Oct 2008 20:47:01 +0000 /blog/?p=251#comment-180 Hi Jim,

Good to hear from you. Since most equities are NOT going to look very pretty technically, I turn to fundamentals. I go the the Stock Check-up and Scouter ratings. All equities that have broken down dramatically (fundamentally) get the proverbial “boot”. They are replaced with stocks that have the highest ratings. The “cream of the cream”. My thinking is that when the institutional investors return to the table, the stocks that are strongest fundamentally are going to appeal to them first. Once that happens the technicals will strengthen. As always, I only want stocks in the top-performing industries. One expression I always used with my sons is that there may not be a great answer but there’s always a best answer.

Best of luck,
Alan

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By: jim https://www.thebluecollarinvestor.com/commingling-of-asset-classes-plus-history-tells-us-not-to-worry/#comment-179 Mon, 06 Oct 2008 13:10:29 +0000 /blog/?p=251#comment-179 I am very optimistic about the market. In fact, I see significant opportunity with these 4 year lows. The problem is finding the cash since it is tied up in the “hold” pattern until it comes back. Any ideas?

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By: Owen Sargent, CPA https://www.thebluecollarinvestor.com/commingling-of-asset-classes-plus-history-tells-us-not-to-worry/#comment-178 Sun, 05 Oct 2008 20:17:12 +0000 /blog/?p=251#comment-178 For those of you who want to simplify your real estate investments (i.e. retiring) without paying the capital gains I suggest a little known trick. The IRS allows a 1031 exchange of a piece of real estate for a “tenant-in-common” investment in another property. That means that you could exchange your building for part of another building owned with somebody else as tenants in common.

Carrying this concept one step further you can exchange your building for a single member LLC which is a tenant in common investor in, say, a shopping center in Atlanta. You get professional management, a check every month and no tenant headaches.

Get professional help if you do this because your basis in the new investment will not be what the management company shows as your investment amount.

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