Monday was an extremely trying day for my portfolio and me. Talk about depressing. Let's see, CapitalSource (NYSE: CSE) took a dive of almost 15% on hellishly high volume (it traded more than 17 million shares on Monday, and AOL Finance lists the 30-day average volume as being a little under 3 million shares) on news about a money-losing sale of assets. Now, once I saw CapitalSource moving down, I knew that Newcastle Investment (NYSE: NCT) wasn't going to be trading higher. Sure enough, there was indeed something new at Newcastle. A new 52-week low. The stock closed Monday at $7.06, down 10% and one penny above the low. And then there's MFA Mortgage (NYSE: MFA). It too was down, although only about 2%. Yeah, only. All of these stocks are at prices well below my cost basis.

I'm at that weird crossroads all investors find themselves at some point. Is it too late to sell? Let me tell you, I don't want to be one of those panic sellers who regrets dumping his stocks because as soon as he does so they start to rise. But, I don't want to be one of those holders who doesn't know when enough is enough. It's pretty rough. You don't know whether to add to positions that are faring poorly and thus risk throwing away money, or whether to avoid adding money and thus risk not getting some bargain prices. And in terms of Newcastle, my colleague Sheldon Liber is with me on this. He thinks the stock may turn out to be a value. See this article.

My other colleague, Timothy Sykes, has counseled me to instead focus on strong stocks that are working. I can't say he doesn't have a point. Indeed, my portfolio does seem rather masochistic. For now, though, I will try to avoid any emotional decisions. I am going to continue to watch the financial carnage as it further unfolds and evaluate every potential stock trade very carefully. This summer is going to be a tough one. I'll let you know what happens.

Disclosure I own CapitalSource, MFA, and Newcastle Investment; positions can change at any time.

You know, I can't take much more of the financial crisis. That's because I own Newcastle Investment (NYSE: NCT) and CapitalSource (NYSE: CSE). I'm kind of hoping we get out of the mess brought on by the housing-bubble pop and the mark-to-market devaluation so that these stocks will rise again. As we continue through this recession, another problem may soon assert itself.

According to this article, consumers are starting to rely on their credit cards a little too much. This could lead to a larger quantity of delinquencies. In fact, the piece states that card delinquencies were at 4.86% in Q1, a multi-year high. Further, revolving debt increased 7.9% in March, coming in at $957 billion. Not too far away from a trillion, my friends. Let me tell you, this is the last thing we need right now. Delinquencies will become a major problem for the banks, leading to further erosion of confidence on financials by investors.

As can be expected, two ideas immediately came up during the course of the article: Visa (NYSE: V) and MasterCard (NYSE: MA). How could they not? If people are taking credit debt, then they must be using those two brand names. Since Visa and MasterCard don't really have exposure to the debt side of things, they are relatively safe from that aspect.

MFA Mortgage (NYSE: MFA) had a good trading session yesterday. A cool thing, since it's well off its recent highs. The stock closed yesterday at $7.01, having risen over 11%. What was the catalyst? Well, some bullish commentary from an analyst certainly helped out, but, for my money, the bigger news was the increase in the dividend. MFA announced a Q1 payout of $0.18 per share, which is 24% higher than the previous quarter's dividend.

This is exactly what I want to see. I'm figuring that, over time, MFA will be able to make more increases to its dividend as it benefits from further rate cuts by the Fed. Granted, MFA did choose to reduce its leverage profile, as I mentioned in a recent post. Nevertheless, this dividend increase, in my opinion, shows that this particular mREIT is a cut above many and worth holding for now. It's going to be a volatile ride, and I expect some profit-taking based on yesterday's action, especially considering the fact that the volume of shares traded wasn't overly high.

Two of my other mREIT investments, Newcastle Investment (NYSE: NCT) and CapitalSource (NYSE: CSE), also fared well in yesterday's session. Another mortgage entity I'm keeping my eye on, Annaly Mortgage (NYSE: NLY), had a good day as well. Let's hope the financials are finally stabling -- granted, many financials, such as MFA, are way off their 52-week highs, but I have to say, I liked the way the second quarter started, and I certainly enjoyed MFA's dividend change.

Disclosure: I own shares of MFA, MFA preferred, CapitalSource, and Newcastle Investment; positions can change at any time.

Well, all I can say is that today has been one of the worst days of my portfolio's life. I'm not concerned about my core holdings -- Disney (NYSE: DIS), Coca-Cola (NYSE: KO), General Electric (NYSE: GE), stuff like that -- but, boy oh boy, are my financial positions taking some major hits!

I know, I know -- you're saying to yourself, "uh, buddy, didn't you realize this was going to happen?" Sure, but when the theory becomes reality, that's when the torture really starts to set in. Not sure if you caught the wave of downgrades today -- if you didn't, check out Eric Buscemi's post about it -- but I got hammered by one of them. MFA Mortgage (NYSE: MFA) was downgraded by Keefe Bruyette on book-value concerns. As I write this, it's trading down over 15% -- oooh, it hurts to write such a double-digit figure -- on, get this, volume of over 15 million shares. The 30-day average volume is closer to 4 million shares. I'm writing this with a couple hours to go to close! It's going to be a huge volume day once all is said and done. I also own Newcastle Investment (NYSE: NCT), CapitalSource (NYSE: CSE) and MFA preferred shares (NYSE: MFA-A).

Have I been shaken out yet? No. In fact, in terms of MFA, I personally think that it is a buy, even though it could be in falling-knife mode right now (that's always difficult to discern). I know Timothy Sykes would disagree on this strategy, so you should check out his post for some balance. With Ben Bernanke most likely set to cut the Fed Funds rate even further, MFA should benefit, as should most financials. I also like CapitalSource, but I am a little wary at this point of Newcastle -- I think it will recover, but that one's been particularly volatile. As they say, when there's blood on Wall Street, that's sometimes the best time to do some judicious buying (after a ton of due diligence, of course). And, as a postscript, if you want to do only safe buying, then Disney, Coke and GE might be good ideas to look at -- GE has an especially interesting yield right now.

Disclosure: Steven Mallas owns shares in Disney, Coca-Cola, MFA common and MFA preferred, CapitalSource, Newcastle Investment, and GE. Positions can change at any time.

MOST NOTEWORTHY: The broadline retail sector, Coca-Cola Enterprises, PepsiCo, Pepsi Bottling and Discovery Holdings were today's noteworthy initiations:

• BMO Capital believes the broadline retail sector will be pressured until valuations reflect a potential recession in 2008, or the housing market begins to stabilize. The firm initiated the sector with an Underperform rating, and started shares of Wal-Mart (NYSE: WMT) and JC Penney (NYSE: JCP) with Outperform ratings and a $52 target and $68 target, Macy's (NYSE: M) with a Market Perform rating and $35 target, and Nordstrom (NYSE: JWN) with an Underperform rating and $38 target.
  
• Bear Stearns started shares of Coca-Cola Enterprises (NYSE: CCE), PepsiCo (NYSE: PEP) and Pepsi Bottling Group (NYSE: PBG) with Peer Perform ratings on valuation.
  
• Wachovia initiated Discovery Holding (NASDAQ: DISCA) with a Market Perform rating on valuation.

OTHER INITIATIONS:

• Genzyme (NASDAQ: GENZ) was initiated with a Sector Performer rating at CIBC.
  
• UBS resumed coverage of Capital Trust (NYSE: CT) and CapitalSource (NYSE: CSE) with Neutral ratings and targets of $35 and $18, respectively.

MOST NOTEWORTHY: Wyeth (WYE), Luminent Mortgage Capital (LUM), CheckFree (CKFR), EOG Resources (EOG) and K-Swiss (KSWS) were today's noteworthy downgrades:

• Cowen downgraded Wyeth (NYSE: WYE) to Neutral from Outperform based on limited long-term limited visibility.

• JP Morgan downgraded shares of Luminent Mortgage (NYSE: LUM) to Underweight from Neutral citing difficult CMO and CDO market conditions.

• JP Morgan downgraded CheckFree (NASDAQ: CKFR) to Neutral from Overweight following the company's acquisition by FiServ (FISV).

• Matrix cut shares of EOG Resources (NYSE: EOG) to Sell from Buy to reflect lower natural gas prices and increasing costs.

• Matrix believes soft demand for athletic shoes is leading to declining sales for K-Swiss (NASDAQ: KSWS), and cut shares to Sell from Buy...

OTHER DOWNGRADES:

• JMP Securities downgraded CapitalSource (NYSE: CSE) to Outperform from Strong Buy.

• Oppenheimer has turned negative on oil and gas names for the near-term, as they now believe the downside risk exceeds upside potential; they cut shares of Apache Corp (NYSE; APA), BP PLC (NYSE: BP), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), among others, to Neutral from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: ValueClick, Inc (VCLK), aQuantive, Inc (AQNT), Cigna Corp (CI), Warner Music Group (WMG), Clear Channel Communications, Inc (CCU) and Medtronic, Inc (MDT) were today's more notable downgrades:

• Baird cut ValueClick Inc (NASDAQ: VCLK) to Neutral from Outperform, citing the FTC inquiry.

• aQuantive (NASDAQ: AQNT) was downgraded to Sell from Buy after the company was acquired by Microsoft (MSFT) and because aQuantive no longer trades on fundamentals. Kaufman and Gabelli also cut aQuantive to Hold from Buy.

• Cigna (NYSE: CI) was downgraded at Prudential to Neutral from Overweight on valuation.

• Warner Music Group's (NYSE: WMG) downgrade to Sell from Neutral at Pali Research was based on the lower industry outlook, which Pali believes revenues are likely to fall at least 10% for the industry in 2007, along with the company's release schedule.

• Bear Stearns downgraded Clear Channel Communications (NYSE: CCU) to Peer Perform from Outperform on the acceptance of the higher bid.

• Medtronic Inc (NYSE: MDT) was downgraded to Underweight from Equal Weight at Morgan Stanley...

OTHER DOWNGRADES:

• Georgia Gulf Corp (NYSE: GGC) was downgraded to Sell from Hold at Matrix USA.

• Stifel cut Core Laboratories (NYSE: CLB) to Hold from Buy.

• UBS downgraded Intuit Inc (NASDAQ: INTU) to Neutral from Buy.

• Occidental Petroleum Corp (NYSE: OXY) was removed from Goldman's Conviction Buy list.

• Friedman Billings downgraded downgraded CapitalSource, Inc (NYSE: CSE) and Countrywide Financial Corp (NYSE: CFC) to Market Perform from Outperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).