| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 7/26/2008 8:01:15 AM | I would like to know if anyone out there thinks that Fanny Mae and Freddy Mac's stock price will go to zero? But the 2nd most important question is do you think that they will go out of Business? If the stock price does go to zero, but the company doesn't go out of Business? Wouldn't that make this a rare opportunity for an investor to become a millionaire, if they were to purchase these shares at zero?
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 7/26/2008 8:20:36 AM | | Well, zero doesn't represent free exactly. Zero does however represent some fraction of a penny. While you and I may not have alot of Dollars, there may very well be here an opportunity for us to turn our pennies into dollars and I mean alot of them. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 7/26/2008 3:43:43 PM | | They actually can't reach zero. The government has protections on both of them already. Besides, if it did happen the entirety of the US economy would crumble to bits. You could have as much "money" as you wanted, but none of it would be worth anything. Just like today, I could offer you a billion buhlables. Sure, you can take them, but why would you need them? | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 7/26/2008 3:51:01 PM | | No, they will never hit zero. It is very doubtful that they will ever go below $1 per share either. They still have enough good mortgages that they are still worth quite a bit. If they get low enough, another major financial corporation would buy them up in a heartbeat in the same way that JP Morgan bought up Bear Stearns. Of course, that other major financial corporation may need government backing to do it because it is extremely unlikely for one company to have the capital to single handedly take in a monster like Freddie or Fannie. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 8/1/2008 10:14:43 PM | | Clearly, some here give their opinions never having ever traded before and their response to this O.P. question reveals their inexperience. Why would one make a comment on this question never having traded in the stockmarket before? Just because a share price goes to zero doesn't necessarily mean that the shares are worthless. Most shares that go to zero, but don't make the news, belong there. It's my belief that even with the government help (which comes very slowly) these shares are very vulnerable to moving to a fraction of a penny (not right away). The momentum downward is very strong. Interesting to me that some here seem to question, "Why would an investor look at or be interested in shares that are falling in share price" ? For those who question. I personally experienced a 500% return on my money within 11 months looking for shares just like these. Not that I'm saying that these shares are a buy now, but the time for trigger pulling approaches. A fraction of a penny seems very possible to me and for the unitiated in here not having a clue. When we (investors) talk about a trade like this we are talking about an extremely rare and historical situation where one single trade can make one multiple millions of dollars. If you're clueless; you won't even see it coming or even believe that it's possible. I've seen this before. The larger brokerage houses are vulnerable to shorter time horizons to produce profitability. The impatience of the average investor is almost always exploited by those who seem to allow their (the average investor's) folly help them to ride the wave to mindblowing profitability. Jack-D-Ripper what source are you using? Value-Line states that their collective debt is only $1.6 trillion section 13 dated 3-31-08 | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 8/2/2008 1:37:40 PM | These are the numbers used many times since this started. I don't know how it is itemized. But I am willing to accept.
Washington-based Fannie Mae and Virginia-based Freddie Mac own or guarantee $5.3 trillion in loans, nearly half of the country's $12 trillion in mortgage debt.
A newly created regulator, the Federal Housing Finance Agency, will ensure that the two companies maintain a minimum capital requirement.
While the Congressional Budget Office has estimated that a bailout of the two companies would most likely cost about $25 billion, critics say that it could cost as much as $1 trillion.
Any funds that are spent on Fannie and Freddie would be tied to the national debt. A separate measure included in the law raises the federal debt limit from $9.8 trillion to $10.6 trillion.
http://www.thebulletin.us/site/index.cfm?newsid=19880483&BRD=2737&PAG=461&dept_id=576361&rfi=8
The announcement Sunday that the U.S. government would rescue Fannie Mae and Freddie Mac, which own or guarantee $5 trillion in mortgages and have contracts with other institutions worth $2 trillion more to hedge the risks behind those mortgages, has not been enough to improve the dark mood.
http://www.istockanalyst.com/article/viewiStockNews+articleid_2403028&title=Jitters_Hurt_Dollar_and.html
The Treasury and the Federal Reserve said Sunday that they would aid the companies if needed. Wall Street has been on edge about the well-being of Fannie Mae and Freddie Mac because the companies hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States
The Associated Press
Most of the loans today in the US are on real estate that has depreciated.... So I would say that most of the loans held or guaranteed are over stated.... | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/8/2008 11:24:27 AM | | Currently these shares are selling for .86 cents per share. The speed of the fall seems to suggest that the shares will go to Zero. I for one can not not play these at that price. Zero represents some (yet unknown, fraction of a penny). Which could mean many 100's of a percent return on each penny's rise. Example; to buy at 1/16 of one penny. If the shares were to go up one penny after that, the return would be 1,600% from one single penny's rise. The compounding interest would be mindblowing. These shares here are very high risk, but the reward far outweighs the risk in this situation in my opinion. The government take -over seems to be temporary. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/8/2008 12:40:28 PM | | I was thinking these were THE hot stocks these last couple of weeks, and now I'm glad I didn't buy. One of my lenders' actual bond traders tells me that Fannie/Freddie are going to be de-listed form the exchange. They are no longer publicly-owned and traded companies. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/8/2008 8:59:53 PM | | You guys are missing that the government just took them over. It is entirely possible that within 5 years they will just declare emminent domain and remove them from existence. They aren't sources of potential wealth, they are a place to put your money briefly so the US gov will give you a pittance later. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/9/2008 9:02:16 AM | As much as I am not thrilled with the idea of the government now controlling 80% of all mortgages in the US, I'd be far less thrilled with nobody owning them. If we just let Fannie and Freddie go belly up and declare bankruptcy that means that partial ownership of the vast majority of homes in the US would be up for sale. Nobody has enough money to cover that value so the value of all homes would plummet as mortgages would wind up selling for pennies on the $1000. Since the biggest investment most people own is their house, that pretty much destroies the entire US.
Also, all the mortgages that nobody purchases wind up in a special category of the bank owns your house, but has to sell it to pay off debt. So they give it to the government (which would somehow have to compensate you for the part you've paid off) then they take your house. I happen to dislike the idea of thousands of empty homes and all their former inhabitants being homeless. I also dislike there not being a US economy.
The problem is that Fanny and Freddie weren't completely private. Yes, they had private ownership, but they were set up by congressional charter. The government tells them what to do from time to time. In order to protect home ownership in the US, Fanny and Freddie had to do terrible business decisions sometimes. The result was home ownership for millions of Americans that honestly shouldn't have been able to afford houses. Now it's coming back to bite us in the ass. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/9/2008 11:38:58 AM | What's a trillion or two among friends.....
After all... somebody has to bail out the big owners of these greedy banks who loaned out money to people they knew would never be able to repay .... unless the housing bubble kept going up and never burst.
And don't worry about the banks, they've already got their money out of it all, including interest. And now they'll print up more money out of thin air to lend to the gov't also at interest to clean up the mess 
http://www.safehaven.com/article-8658.htm | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/9/2008 12:42:27 PM | What ever happened to letting companies sink and life moving on? Capitalism is supposed to be about letting the consumer decide what sinks and what doesn't. The strong survive and the weak disappear. It's supposed to bring out better products in the long run. Unfortunately this isn't happening cause the government keeps bailing out idiots. Just like the whole airline industry. What? Do people honestly think that people will stop flying? Even if one airline goes under it just means that someone else will take it's place. OR one of the other competitors will pick up the demand. It's not like people are just going to take buses across country or something. Get real. So I say let them go under. Quit wasting time in this and start wasting time into more important matters. Like why the economy is crap to begin with, trade deficit, outsourcing, NAFTA, CEOs being paid too much, CEOs sinking companies and then getting let off the hook even though they have millions and cause average joes to lose their jobs, etc. Those are real problems.  | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/9/2008 12:57:57 PM | | Oh and by the way Richard Branson (the billionaire) talked about how he doesn't understand why the government does this. If the government is going to do such things then why don't they bail out Sears or Kmart? Seriously. What, they not losing money fast enough? The pick and choose attitude of the government also bothers me. | |
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/9/2008 3:01:05 PM | Look, I know it's fun to rag on the big whig execs, but it isn't their fault (not on a fundamental level anyway). Everyone is bashing them for taking on loans they knew wouldn't be repaid. Well, that wasn't their choice. The federal government created Fannie and Freddie. On top of that, the government ordered them to take over the loans of other banks that couldn't handle it on their own. All this was done so that people making less than 60k or 80k per year could own a house. Somewhere along the line we decided that was the American dream and we should all get a house. In truth, most people just can't afford houses. We didn't want to deal with it, now we have a melt down.
There is another basic flaw with putting all the blame on them. Capitalism is designed in a way that they were guaranteed to fail in the long run. As in, there was no possible way for them to work in the long run even if they did everything perfectly. If you actually read what Smith wrote, the reason he said that monopolies destroy capitalism wasn't just because they have no competition. Them having no competition happens as a result of the underlying problem. The actual problem with a monopoly starts when it is impossible for people to freely enter and exit the market. Only in a system where competitors can freely join or leave a market does supply and demand actually work. So, as soon as Fannie or Freddie get so big that you and five of your friends can't pool a year or two's savings and start a new investment bank (or a rich executive from another industry can't just use a month's profit to do the same thing) capitalism falls apart. Fannie and Freddie have no meaningful competition, they can't because it is utterly impossible because they have more money than some states do. I'd be willing to wager that the county I live in could sell every inch of land, every stalk of corn, every house, every dog, and everything else and still not have enough money to start up an investment bank. On the flip side, Freddie can't say "this isn't profitable for me, I'm gonna leave the sector now and go drill for oil, that's profitable today." So in truth, capitalism doesn't have any effect at all on any company worth more than 100 million or so. Once they reach a worth of 10 billion, they reach the point where they are on an even negotiating field with political states.
You might ask then "who is supposed to do the things that can't be done without a company that big." Well, last I heard it was the government's job to do for the people that which they cannot do for themselves. Well, since the people can't form an investment bank for themselves... The problem with that of course is that would lead to socialism for all large businesses... | |
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amg72
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Joined: 8/29/2008
Msg: 22 | |
| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/10/2008 12:43:36 PM |
The federal government created Fannie and Freddie. On top of that, the government ordered them to take over the loans of other banks that couldn't handle it on their own. All this was done so that people making less than 60k or 80k per year could own a house. Somewhere along the line we decided that was the American dream and we should all get a house. In truth, most people just can't afford houses. We didn't want to deal with it, now we have a melt down
Yes the government did create these agencies and IMHO they never should have been privated. How can an entity be set up both to help the public and to make profits for it's investors?
Also, IMHO people only earning 60-80 K, that are not the problem...... problems occured along with deregulation which allowed the shadier mortgage brokers to sell mortgages that made them the most money in terms of bonuses and yeild spread opposed to which mortgages best met the needs of their clients. Even people with good credit were sold subprime loans that they could afford now but couldn't afford in a few years once they reset. | |
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| Welcome to the USSRA (United Socialist State Republic of America)
Posted: 9/10/2008 5:26:25 PM |
Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
So now Comrades Bush, Paulson and Bernanke (as originally nicknamed by Willem Buiter) have now turned the USA into the USSRA (the United Socialist State Republic of America).
Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street.
A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion.
This biggest bailout and nationalization in human history comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history.
These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs.
But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.
This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).
http://www.rgemonitor.com/roubini-monitor/253529/comrades_bush_paulson_and_bernanke_welcome_you_to_the_ussra_united_socialist_state_republic_of_america
Tell me it ain't so .... | |
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| Risk / Reward ratio is just too favorable to ignore
Posted: 9/11/2008 4:17:58 PM | I heard a report that the government take over is only temporary to get the company back on solid footing. If these companies aren't going out of business, even if temporarily delisted, (delisting doesn't close a business by the way). I've experienced a company being delisted only to return from a price of zero, back to $3.50 per share 11 months later. Delisting occurs after price goes to less than $1.00 per share for a period of time. I'm getting a different picture than the rest of you here. If the share price is going to zero and the company's not going out of Business and the problems that caused the problem in the first place are being fixed? All these things being factual. If I thought the business was going to fail, I'd still make a small bet against myself. I'd say for example, Freddy Mac is going out of Business, but just in case they don't; I'll buy $300.00 dollars worth, just in case. I'm telling all of you, that I've seen this before, but not with a company as vital as Freddy Mac and Fanny Mae. A fraction of a penny bet is well worth it to me. If I'm wrong, $500.00 dollars gone still makes me poor. Being right could mean as much as $12 Million dollars in my stock portfolio.
amg72 says: " Yes the government did create these agencies and IMHO they never should have been privated. How can an entity be set up both to help the public and to make profits for it's investors? "
But they did do this didn't they? And they did it for years. Real Estate isn't just Business, It's Big Business and Fanny Mae and Freddy Mac were the Lubricants to these transactions they brought fluiditity to this industry for years. I put it out there. Each do what is within your own will. Remember your disregard here later, ok ?
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| Will Fanny Mae (FNM) & Freddy Mac (FRE) stock go to zero in Price?
Posted: 9/12/2008 5:13:58 PM | Ren83 says; "No, they will never hit zero. It is very doubtful that they will ever go below $1 per share either. They still have enough good mortgages that they are still worth quite a bit. If they get low enough, another major financial corporation would buy them up in a heartbeat in the same way that JP Morgan bought up Bear Stearns. Of course, that other major financial corporation may need government backing to do it because it is extremely unlikely for one company to have the capital to single handedly take in a monster like Freddie or Fannie."
Zero is a representation of some fraction of a penny. This will have to do as our definition given that many of the stock reporting agenies will call it zero at these given values.
But back to my point ! Doubtful that they will ever go below $1 per share either.
" Today these shares closed at .46 cents per share. " Ha ! Questioning my judgement! | |
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