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Re: Investing When Interest Rates Rise
I'm not all that crazy about GNMAs. Why? You get a higher yield, but in return you get an asset that is pretty funky and hard to analyze. Since these securities pose extension risk in an up-rate scenario, and refi risk in a down rate scenario, you have traded away all of the upside in return for higher yield. No thanks. Thta's one of the reasons I like having a fixed rate mortgage: I get to keep the options and benefit from rate swings.
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"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."
- Will Rogers
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