Commercial Mortgage Securities; Stock Down / Bonds Up

Market Watch points out that commercial mortgage stocks led the financial sector lower on Friday (3/27/09) while The Wall Street Journal reports that commercial mortgage bonds were big winners this week.

 

This is what we investment banker types call an inverse correlation.

 

Some inverse correlations are fixed. For instance interest rates and bond prices; when bond rates go up bond prices always go down, always, it can not be otherwise. Other inverse relationships are anomalies that may or may not happen with any regularity.

 

Commercial real estate stocks falling while commercial real estate bonds rise is an example of an anomaly. The inverse correlation does not have much to do with the securities that are fluctuating; it’s caused by other market and economic factors.

 

The point is don’t try and trade this trend unless you know what is causing it and when it will stop.

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MasterPlan Capital LLC offers commercial mortgage loans, equity finacing and asset management to commercial property owners, investors and developers, nationwide. Click our logo below to apply online and recieve an answer the very next business day.

 

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