Here Is What Reddit Traders Are Missing About Invesco Mortgage Capital

Stock traders that get their investing advice on Reddit are still looking for the next Gamestop moon shot. One company that has been in some of the discussion lately is Invesco Mortgage Capital (NYSE: IVR). The company's stock price jumped 15% earlier this month on hopes of a short squeeze.

Veteran stock investors have learned that betting on short squeezes is generally a long shot. Most investors are far better served by buying stock in strong companies with great fundamentals.

Invesco Mortgage Capital is a mortgage real estate investment trust (REIT). Unlike most REITs, which invest in properties and then rent them out, mortgage REITs invest in real estate debt; in other words, mortgage-backed securities and similar assets. These companies resemble banks more than they resemble a mall REIT or office REIT. They borrow money (similar to the way banks take deposits) and then buy mortgage-backed securities (similar to the way banks make loans).

Source Fool.com