Fannie Down 20% in Two Days: Strong Chance of Recovery

Fannie Mae (FNM) is down over 20% in the last two days as questions over its accounting for delinquent mortgages have caused investor unease. If the stock closes around its current levels of $37.62, this will mark the worst two-day decline in the stock's history.

Going forward, should investors buy the stock? We looked at prior two-day declines of 15% or more in FNM's stock, and found that over the next week and month, the stock's performance is mixed. However, over a three month period, the stock has been up three out of four times for an average gain of 9.47%.

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