Dynex Capital Inc.: Still Not Suitable For Retirement Accounts

This is the second in a series of articles where I will be covering the historical performance and operating results of popular and highly recognized mREITs (mortgage REITs). In my first installment, I covered Annaly Capital Management (NLYfound here, with this installment I’m going to cover Dynex Capital Inc (DX).

However, before I go further, I wanted to respond to some significant pushback I received in the comment thread of my first installment on Annaly Capital Management (NLY). Several comments criticized me because I admitted that I did not understand the complex business model of mREITs. 

Here is what I said: “In addition to what I covered above, one of my primary issues with including mortgage REITs in retirement accounts is the complexity of their business models. As the title of this section suggests, I find the business model of mortgage REITs both complex and confusing.”

My retort to those critics would be that my article was suggesting that mREITs were too complex for most lay investors to understand. As a professional with 50 years’ experience, I included myself in that universe even though I am a professional.  Therefore, I consider that reason enough for most retired investors living off their income who also need that income to grow to avoid this asset class.

Furthermore, these statements were associated with the sage advice of the venerable Warren Buffett as follows: “Investment Must Be Rational; If You Don’t Understand It, Don’t Do It.” Therefore, this supports my contention that mREITs are not suitable for most retirement accounts due to their complexity.

I later added the following: “Consequently, I personally have little confidence in evaluating mREITs, and even less in attempting to forecast what their futures would hold for me as a shareholder.”Once again, I stand by that statement which I believe supports my contention that mREITs are not suitable for most retirement accounts. I continue to stand by that position.

Nevertheless, I will further retort those criticisms by stating that I am fully qualified to evaluate any stock’s historical performance and operating history whether I understand its business model or not. The results that I evaluated and reviewed in my first article, and I will be doing so again in this article, can be understood by all – yours truly included. Consequently, I will repeat that I am fully qualified to evaluate the historical performance both operating and investment results of mREITs and any other investment that I choose to evaluate.

Additionally, I will conclude this introduction by adding that one of the benefits of initially evaluating any company’s historical performance and operating results is that it provides the opportunity to easily determine whether (or not) a given stock is due diligence and research worthy.I am on record many times of supporting and vigorously recommending that comprehensive research and due diligence should always be performed before any investment is made. 

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Disclosure: No position.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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