No hopes for FNM, FRE - down by 80%

Fannie Mae and Freddie Mac, the giant mortgage firms have tumbled down by around 90% and 83% respectively after decision of government take over.

I dont see any chance of a bounce back or recovery in these stocks. The July housing news have been quite bad and these firms are likely to report horrible results in the coming quarter. The Fed has decided to keep putting money in these GSE's (Government sponsored enterprises) periodically so as to keep their networth positive. These firms will surely keep making losses for the coming couple of quarters and the Treasury will have to keep putting money. This will keep eating the shareholders share in the company and the prices will likely keep dropping further. If you hold this, exit now and recover your brokerage charges :)

Sep 9, 2008

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