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Fannie Who?
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Fannie Mae has been a bastion in the finance world for many new and moving up homeowners. Until the subprime crisis, I'd have called the stock a bedrock in any portfolio. Fast forward from high praise to current conditions. My message is to run, run, run from this and most of the financial stocks. Sure value players are probably casting gleeful eyes at Fannie now that the price has dropped precipitiously. But waiting for the rise in value stocks in the financial markets today will be like watching grass grow in September; it will be a slow, ardious process. Currently several analysts have a sell rating on the stock. There is a big reason for all of this and they have even more insight into the numbers than many of us. My suggestion is to wait. Watch the economy post this phoney stimulus mess and then evaluate Fannie very closely. She may show some life in 2009 or 2010, but I'd let the stock rise closer to 30-32 range to see if it can hold. I'd be afraid to tie up good money in hopes that it might go up, because it could sit for ages with all the headwinds the economy is facing. | ||
Comments (1)
Becky,
Today is Double D-Day June 6, 2008 , because for the market it was Double Down Day ..... Best and only up sector --- GOLD !!!!.
Happy, Happy, Joy, Joy for a GoldBug like yourself.
Fannie Who ? Fannie Mae who is related to Daisy Mae and always tries to get hitched up with Li'l Abner on Sadie Hawkins Day, She has a track record of failure.
FNM is neither Fish nor Fowl but it is FOUL.
It started out a government agency who's job was to create liquidity and a home mortgage market by buying mortgaes from S&L's ( Savings & Loan Associations ( known in the UK as Building Societies )
As a GSE ( Government Sponsored Entity ) they have the government essentially co-signing and guaranteeing their debt. Many attempts to essentially cut the umbilical cord and wean FNM from the government's Mother's Milk have failed. Politicians love it as a way to mandate quesrionable socialand economic programs and have the FNM shareholders at least in part fund the losses. Didn't FNM just cut it's divvy by a third ? It's another lever of power and a blame-taking straw man in the middle. Too much politics & too much bureaucracy. It's acash cow for politically connected consultants and "experts".It has the efficiency of the post Office and the effectiveness of, well, Congress in solving problems.
The S&L's are GONE with the wind.
The banking system was distorted because
FNM can borrow money cheaper due to the Implied promise of government-backed bail outs, Banks had to find new and more risky businesses to get into.
FNM's debt MAE be ' secure ' but nobody's going to bail out shareholders; they don't have GOLDen parachutes[ expressed or implied ].
Don L. Ferk ( aka VikingWarrior )
PS : These topics are very complex - if I've reduced the story to absurdity - forgive me,
it would take a TOME to put it all down, Suffice it to say that fraud, waste, abuse, scandal and controversy are not new to FNM.
Song O'da Day
Gold Dust Woman ---- Stevie Nicks / Fleetwood MAC
http://youtube.com/watch?v=CcBc9iwPN50
http://youtube.com/watch?v=CcBc9iwPN50
Posted by don ferk | June 6, 2008 6:06 PM