The Federal Housing Finance Agency, which placed the two companies in conservatorship on Sept. 7, directed them last month to start increasing their purchases of loans and mortgage-backed securities as the Treasury seeks to absorb underperforming and illiquid assets from financial companies.When patients, already sick, are being fed poison pills by the doctor they turn to for healing, there's virtually no hope of recovery. But then, considering what Bernake and Paulson are doing to the nation's economy at large, is there any safe harbor?
Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds ... Each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential.
Showing posts with label FRE. Show all posts
Showing posts with label FRE. Show all posts
Thursday, October 23, 2008
Headed South ...
When Freddie Mac and Fannie Mae were taken into custody, I held out some hope that the government's goal was to shepherd them back to solvency ... but it turns out they're doing a better job of destroying the companies than the corporate executives that ran them into the ground to begin with.
Friday, October 10, 2008
Weekly Summary
This past week was murderous to my portfolio - though given the performance of the entire market, I don't think I'm alone in this predicament:
Given the way things are going in the overall market, I'm going to have to deviate from my general strategy of dumping a position when it falls below 50% of its original value. Otherwise, I'd be dumping about half of my portfolio: DEXI, FEEC, RAD, IVAN, and FRE.
The wise guys are saying that this is the time to buy, as you'll make a killing when the market recovers. While that sounds like good advice, they've been saying the same thing for the past month, and anyone who's done so is sorely regretting it.
I'm going to wait for a full week of positive movement before I get any deeper into the markets, and I'll hold onto what I've got in hopes of recovering some of what I have already lost.
Given the way things are going in the overall market, I'm going to have to deviate from my general strategy of dumping a position when it falls below 50% of its original value. Otherwise, I'd be dumping about half of my portfolio: DEXI, FEEC, RAD, IVAN, and FRE.
The wise guys are saying that this is the time to buy, as you'll make a killing when the market recovers. While that sounds like good advice, they've been saying the same thing for the past month, and anyone who's done so is sorely regretting it.
I'm going to wait for a full week of positive movement before I get any deeper into the markets, and I'll hold onto what I've got in hopes of recovering some of what I have already lost.
Friday, October 3, 2008
Weekly Summary
It's the end of a turbulent week in the markets, and my portfolio has taken a $500 dive:
Nothing has done particularly badly: Krispy Kreme and Freddie Mac have dropped about $100 apiece, and the rest of the loss is forty dollars here, sixty there, twenty there - every single stock is down from where it was last week.
In brighter news, much of the turbulence has been over the federal bailout bill, which has finally been passed and signed. Like many investors, I have mixed feelings about it - whether it was the "right" or "wrong" thing to do from an ethical perspective, and whether it will make any difference at all to the markets, what with other economic indicators sagging ... but what's done is done, and we'll just have to wait and see.
Nothing has done particularly badly: Krispy Kreme and Freddie Mac have dropped about $100 apiece, and the rest of the loss is forty dollars here, sixty there, twenty there - every single stock is down from where it was last week.
In brighter news, much of the turbulence has been over the federal bailout bill, which has finally been passed and signed. Like many investors, I have mixed feelings about it - whether it was the "right" or "wrong" thing to do from an ethical perspective, and whether it will make any difference at all to the markets, what with other economic indicators sagging ... but what's done is done, and we'll just have to wait and see.
Friday, September 26, 2008
Weekly Summary
It's been a week of ups and downs on the market, and the net result has been largely a break-even from the week before:
Most of the Wall Street's mood-swings deal with uncertainty over the government's plan to bail out the financial sector, and the only stock directly affected is Freddy Mac, which has recovered nicely from its initial tumble.
It may be that buying in wasn't such a bad idea after all, and that it's taking some time for things to be set right ... though there's still a chance I'm dead wrong, and it will fall back to nothing. To some degree, that's true of each of my positions.
Most of the Wall Street's mood-swings deal with uncertainty over the government's plan to bail out the financial sector, and the only stock directly affected is Freddy Mac, which has recovered nicely from its initial tumble.
It may be that buying in wasn't such a bad idea after all, and that it's taking some time for things to be set right ... though there's still a chance I'm dead wrong, and it will fall back to nothing. To some degree, that's true of each of my positions.
Friday, September 12, 2008
Weekly Summary
Things have changed quite a bit since last week, and one risky play has wiped out my profits for the entire year:
The question I ask myself when a deal goes south like this is: would I do it again? And the answer: probably so. I knew when I got into it that it was a hard-way bet and I was bucking the market ... and if things had worked out differently, I'd have cashed out nicely. As it stands, I have a ghost of a chance that it may recover later this year, and another tax write-off if it doesn't. Way it goes, sometimes.
On the bright side, if I played it safe and bought into an index fund, I'd probably be in the same shape, almost to the penny: the DOW, the S&P 500, and the NASDAQ composite are all down about 15% for the year - so what's the difference?
The question I ask myself when a deal goes south like this is: would I do it again? And the answer: probably so. I knew when I got into it that it was a hard-way bet and I was bucking the market ... and if things had worked out differently, I'd have cashed out nicely. As it stands, I have a ghost of a chance that it may recover later this year, and another tax write-off if it doesn't. Way it goes, sometimes.
On the bright side, if I played it safe and bought into an index fund, I'd probably be in the same shape, almost to the penny: the DOW, the S&P 500, and the NASDAQ composite are all down about 15% for the year - so what's the difference?
Monday, September 8, 2008
Freddie Mac - Whacked
Yesterday, the Treasury Department announced a takeover of mortgage giants Fannie Mae and Freddie Mac. While the bailout eased market tensions, it's bad news for shareholders: the stock price of both companies took a nosedive.
I knew when I got into this that I was betting against the house, and last week's recovery of the stock price was an encouraging sign - but the surprise announcement this weekend completely erased that, and I've gone from a 66% profit to a 72% loss in a single trading day.
That's just the way it goes, sometimes.
For now, I'll hold my shares rather than dumping them, on the hope that the market's reaction was an over-reaction and the stock price will recover - though it's equally likely (and some would say even more likely) that the firm will sink from a conservatorsip to full-blown nationalization in the coming months.
I knew when I got into this that I was betting against the house, and last week's recovery of the stock price was an encouraging sign - but the surprise announcement this weekend completely erased that, and I've gone from a 66% profit to a 72% loss in a single trading day.
That's just the way it goes, sometimes.
For now, I'll hold my shares rather than dumping them, on the hope that the market's reaction was an over-reaction and the stock price will recover - though it's equally likely (and some would say even more likely) that the firm will sink from a conservatorsip to full-blown nationalization in the coming months.
Friday, August 29, 2008
Weekly Summary
In spite of today's losses, it's been a great week for my penny stock portfolio:
The gamble I took on Freddie Mac seems to be paying off nicely - while the firm is still on shaky ground, the doom-and-gloom predictions have been considered and rejected by the market and the price has made a substantial recovery throughout the week. Meanwhile, my other positions have made moderate progress, and even the most flea bitten of my dogs are showing signs of recovery.
The gamble I took on Freddie Mac seems to be paying off nicely - while the firm is still on shaky ground, the doom-and-gloom predictions have been considered and rejected by the market and the price has made a substantial recovery throughout the week. Meanwhile, my other positions have made moderate progress, and even the most flea bitten of my dogs are showing signs of recovery.
Friday, August 22, 2008
Weekly Summary
In general, it's been a good week for me - transfer of additional funds into my portfolio to take a risk on Freddie Mac has diluted my return ratio, but it's still looking pretty good.
My sickest dog (MIVA) has pulled back from the edge of a stop-loss sell order, and a handful of them are doing well - especially Krispy Kreme. I'm at a loss to explain that, in the absense of any market news - but I don't feel the need to worry about a ray of sun in an otherwise stormy market.
My sickest dog (MIVA) has pulled back from the edge of a stop-loss sell order, and a handful of them are doing well - especially Krispy Kreme. I'm at a loss to explain that, in the absense of any market news - but I don't feel the need to worry about a ray of sun in an otherwise stormy market.
Thursday, August 21, 2008
Federal Home Loan Mortgage Corporation (FRE)
| Company: | Federal Home Loan Mortgage Corporation |
| Web Site: | http://www.freddiemac.com |
| Purchase Price: | $3.05 |
| Current Price: | Click Here |
I've moved about $1,000 into my Penny stock account to take a gamble on Federal Home Loan Mortgage Corporation, affectionately known as "Freddie Mac" - in hopes that it's a daring move that will pay off nicely ...
The mortgage giant is beleaguered by write-offs, and industry pundits seem to expect that the company will soon need a federal bailout that will devastate, perhaps completely eradicate, shareholder equity, and the price has plummeted from a 52-week high of $65.88 to a mere $3.05 a share ... making it a "penny stock" by the "less than $5 per share" definition.
The doomsayer's predictions are possible - and many would say that they are likely - but there remains a good chance that the company will pull out of its crisis, or that a government-engineered plan to save it (and keep the mortgage markets fluid) may not be as damaging to the current investors.
Though the disclaimer at the top of my blog discourages readers from following my (risky) investments in this portfolio, it's worth repeating for this one specifically: this is a big risk, and I strongly discourage anyone from tailgating me on this gamble.
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