Monday, August 10, 2009

Fannie Mae and Freddie Mac Center Stage

We thought it would take generations for FRE and FNM to claw their ways out from penny stock status. However, to our surprise both penny stocks proved us wrong. Today both FNM and FRE crossed the $1 mark. In-fact, FRE moved well over $1.
I do not believe there is any significant evidence that the market will continue to support these inflated prices. The two lending agencies are laden with debt and FNM recently asked for an additional 10 billion to cover its losses. There is certainly some over zealous buyers in the market and they will probably regret jumping on the hysterical buying trend.
Taking into consideration the recent trends in the market and the significant improvement of banks bottom lines. We feel it is time for the Federal Reserve to stop giving our money away!

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