phillips49

Witnessing the Biggest Transfer of Wealth in History

Everybody is entitled to an opinion as you stated.

My opinions:

The Fed is walking a tightrope on interest, not necessarily because of the best interest of FRE or FNM shareholders and bondholders, but because of the balancing act between throwing the entire economy into a deep recession, igniting serious inflation, supporting the dollar and trying to keep energy costs contained.
At this point in the cycle, I think the following is true:
Lower interest= weak dollar=higher oil
Lower interest=higher inflation
Lower interest=higher home ownership rate
Lower interest=better propects of avoiding a deep recession
Higher interest=recession=hig... unemployment
Higher interest=stronger dollar=lower oil prices
Higher interest=reduced homeownership

The Fed created this mess because they raised interest rates to fight demand based commodity inflation. Wages where never an issue. The process of raising interest rates caused the collaspe of the mortgage market and nearly the entire financial system due to derivitives and leveraging because they didn't understand the consequences of their actions.
One way or the other the tax payer is going to pay for all of it. It's just what pocket it comes out of, whether a few pay for all or whether everyone pays a little. Keeping as many employed as possible seems like a better choice to me. Even no growth is better than a major contraction. Having a job to pay for higher gas is better than no job and gas at a lower price.

Why I Finally Bought Fannie Mae

Stan,

I was of the same mind as you and I bought FNM. In a matter of weeks I lost 37% of my money. That was more pain than I could stand. I got out while I still had something to get out. If I had held on, I would have lost an additional 30%. At the end of the day, it doesn't make any difference what we think. Stock is only worth what someone else is willing to pay for it. The market obviously sees a lot more risk than potential reward and has pulled all support. Hope your investment is a small holding.