Capstead Mortgage (CMO)

Add a New Bulls Reason Company: Capstead Mortgage (CMO) Current price: Headline: (100 character max) Analysis: Cancel 100% agree 4 votes   CMO is in an advantageous position going forward in 2009 Top Contributor: Daily Wealth | Created when NYSE:CMO was $10.94 | Edit | History Right now, we have an opportunity to buy into a few very simple businesses. They borrow money at around 3% interest and invest it at about 5% in government-guaranteed investments. This last part is crucial: These companies don't take any credit risk. The U.S. government is 100% responsible for paying the interest on those investments. The idea is pretty straightforward. These businesses simply earn the interest "spread" like a bank... But importantly, they're not banks. They don't have teller machines, or buildings, or even many employees. But they do earn an interest spread. So I call them "virtual banks." Right now, these virtual banks are earning a huge amount of money. The government is keeping short-term interest rates low, so these virtual banks can borrow at a low rate of interest. But interest rates on the government-guaranteed investments they buy have still not come down, so they can earn a high rate of interest for a safe investment. We're in the "sweet spot" for virtual banks. (100 character max) Cancel 0% agree 0 votes   buy....... Top Contributor: alfred shemaria | Created when NYSE:CMO was $12.72 | Edit | History I would buy.... (100 character max) Cancel

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