Mixed opinions on Fannie and Freddie
July 11, 2008 by Tisa Silver
Filed under Finance
Today, shares of Fannie Mae and Freddie Mac continued their tumultuous decline, trading down in excess of 30 percent before noon.
One analyst at OptionMonster, Inc. said that shares of the two are likely worthless while analysts at Citigroup say the sell-off has been excessive. In a speech this morning, Secretary Paulson offered little insight through a statement which said the primary focus is to support Fannie and Freddie “in their current form.”
Who are we to believe? A decline this steep for two government sponsored entities is an indication that something is indeed wrong, but for me, the market is not transparent enough to determine what is wrong and how deep it is.
I believe the stock prices are going to continue to fall. Seeing how Secretary Paulson didn’t reassure anyone in his soring statement I think people will continue to dump the stock until some bigger positive announcements are made.
I’m taking advantage of what I believe is an overreaction to this news by buying Wachovia low. I bought 100 shares of it this morning at $11.35 and I’m hoping Monday it will rebound. It is up to $12.16 right now.
I did something similar to this with the stock earlier this week and made a quick $100. If I’m wrong and the stock plummets, I will hold it long term in the hopes that the JP Morgan rumors are true and Wachovia will be bought out at over $25.
Since this is my last comment I just want to say thank you to Professor Silver for a great class.
I learned about Fannie Mae and Freddie Mac in my finance class last semester and the decline started around that time. It looks like the stock price is continuing to fall like most companies and nobody knows when they will start to raise. Which is why most people are selling their stocks now.
who said they were worthless, Jon Najarian? One of Pete’s wakeup calls recently said the stocks have been acting like leading indicators, at least as far as daily trading goes.
As you can tell we are definitely in a recession, gas prices are high, dollar is at low value, gold prices are high, and financial firms are going down. Seems to me like this isn’t a good time to spend money and better to save money. The government is saving these firms but the government can only do so much and if firms keep falling out like this than how much more can the government help everybody. In the long run we’ll be paying for it through the government.