http://www.bloomberg.com/apps/news?pid=2...

So much ignorance, so little time.

1. All of the people interviewed seem to have a hard time understanding the difference between Agency MREITs and Commercial MREITs.

Agency == Interest rate sensitive (in a normalised enviroment)

Commercial == Credit sensitive.

Agency reits are about arbitraging the spread between short term funding and longer term assets. Commercial lending is about credit spreads, and not about speculating about interest rates.

The whole bonds don't grow thing, is a conceptual mistake. The goal of fixed income investing is to earn a high real return over the long run.

The only differecne between a bond and a C-corp is that the C-corp reinvests in itself vs the bond which pays out 100% to the holder. If you reinvested the interest into more bonds, your bond portfolio would show "growth"

"“The tepid response is due to multiple concerns,” said Ferguson. He called the companies “blind pools with no existing investments; as such, they aren’t worth the issue price at the time of offer and so really won’t go up until the money is put to work.”"

Which suggests buying before the money is put to work, and then either holding on, or selling to fools who like to pay retail for what can be purchased wholesale.

Commercial/Agency MREITs will always be more attractive than banks because they don't pay corporate level income tax. Same deal for BDC's.