Sell REITs

Now is the time to sell your real estate investment trusts. The double-digit dividends will not offset the double-digit capital losses that are on the way due to recession fears. Highly respected Annaly Capital fell almost 5% on Monday, October 3, 2011. American Capital Agency dropped around 4.5% in addition to previous declines. Then, for a real scare, Armour Residential slid 13%.

REITs are great when interest rates are low as long as there is no immediate chance of a recession. They can easily borrow cheap money, and then farm it out for a much higher rate. But only a few people will have any money to spend in a recession or depression. Hence, REITs cannot make money in today's environment where the world is about to tear apart at the seams. Financial catastrophes are looming in the U.S. and Europe. China cannot bail out everyone either because they are starting to have problems of their own. TVIX, the double VIX ETF, has gone from $25 at the start of August to $100 today. It can probably go to $160 before the volatility ends. If you don't want to be in cash or quality bonds, TVIX is your best bet for profit when the stock market makes an avalanche to the bottom.