On Friday, we noted that Fannie Mae Looks Like Hell. In the weekend linkfest, we noted the Fortune article about Fannie Mae, as well as out own "Sell" on the stock.

The emails from numerous readers were fascinating. I learned some things about my ancestry that turned out to be less than complimentary; I got to imagine several hypothetical yoga positions that, unless one is amazingly flexible, appear to be impossible. I was also informed that I had no insight whatsoever into "how the trading of stocks works." Oh, and, it turns out that according to one emailer, I am "f$%^ing clueless." My favorite was the one suggesting I should get cancer and die. 

The closest thing to legitimate criticism came from B, who this morning noted it was "better to be lucky than smart."

Indeed.
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Fnm

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For those people who are still interested, despite the myriad of issues with my ancestry, intellect, and "f$%^ing cluelessness," I believe covering half of any short positions today is the prudent approach to such an outsized move — 10 points in 2 days . . .

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Category: Corporate Management, Credit, Derivatives, Earnings, Short Selling, Technical Analysis, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

27 Responses to “Fannie Mae: Ouch!”

  1. jopo says:

    fannie and freddie down 20+%…at least the dow is up over half a percent….thank goodness for the ppt!

  2. X says:

    Barry,

    There is nothing better than getting the last laugh on those petulant little people.

  3. Pete says:

    Any person moronic enough to curse you for writing your opinion on your website, probably also bought this stock because they thought the government guaranteed them a positive return.

  4. W.Edwards says:

    Just because FRE and FNM are GSEs (Gov’t Sponsored Entities), it doesn’t mean that they are smart at what they do. If anything, there is a lot of evidence to the contrary.

    And even if people learn that it IS possible for them to crap out, the GSE status doesn’t mean that the government will bail them out. There is a strong political motivation for government to bail them out but they don’t have to.

    People that view these GSEs as good as government-quality are (or will be) sadly mistaken!

  5. viamede says:

    99.9% of vistors here (I polled myself…don’t ask about the .1%…it gets angry) appreciate your views and insights. Thanks.

  6. druce says:

    Calculated Risk has an awesome writeup -

    http://calculatedrisk.blogspot.com/2007/11/fannie-maes-credit-loss-ratio-fuzzy.html

    In a nutshell, when a loan in an MBS pool goes past due, the pool doesn’t have the ability to restructure, so it heads toward foreclosure. FNM has the option to buy the loan out at par if it thinks it can restructure and make money. Everybody wins, the pool gets its principal back immediately, the buyer keeps his home, FNM makes a buck in the long run. However, in the short run, they sometimes have to take a GAAP writeoff so it’s on their books at lower of cost or market.

    Suffice it to say this s*** is complex, it’s got layers like Shrek.

    There’s a time when the market goes up for every meaningless PR statement, and there’s a time when the market damns you if you take the writeoff, and damns you if you don’t.

    We’re might be getting close to that time when it might make sense to look at the long-term franchises of some of these companies and take some pain in the short run.

    In the case of FNM and some of the other financial institutions they would have to take the proper steps so the business was understandable and the financial statements meant something.

  7. Peter says:

    Nice. What a scary disaster.

    If FNM and FRE continue to melt down it will be almost impossible to get a conventional mortgage in this country. CFC is only making mortgages that they can sell to them.

    Funny today that people are buying stockks as one of the 2 largest buyers of mortgages is imploding in front of our eyes.

    Can you say denial?

  8. Al Czervik says:

    re those nasty emailers – all long FNM and FRE I would guess.

    Look at these two stocks today (not to mention their cliff dive since early October) and think about what these companies are. I mean, we’re not talking CROX here.

  9. brbrown says:

    I too am sorry to hear about those emails. Though I guess you could be flattered that your opinion gets a strong response (as opposed to a ‘who cares’).

  10. John F. says:

    It’s hard to think of these two as cult stocks. I’d hate to see your mail if you issue a sell on something like Apple!

  11. John says:

    Let me just say that I have been selling loans to both Fannie and Freddie for years and anyone who thinks they don’t buy subprime loans is drinking too much of Larry Kudlow’s KOOL AID.

  12. Stormrunner says:

    Fannie’s share price is collapsing down 24% as I type, 5 day total drop of ~40% ominous!!!!

  13. Bob A says:

    ya think CNBC is ever gonna get paid for all those Countrywide ads they’re running?

  14. Robert says:

    I think you should post the juiciest of those emails, along with the sender’s email address…

  15. Bob A says:

    goldilocks back in the ER complaining of sore behind

  16. patient renter says:

    Wow, what a bunch of touchy cheerleaders around here. It seems to me their are much more important things they should be doing with their time than sending you hatemail.

  17. Geert Noels says:

    Dear Barry,

    You have my deepest respect.

    An economist/analyst who dares to say impopular things out of unbiased conviction deserves applause and no insults.

    kind regards

    Geert Noels
    Chief economist
    Petercam
    Brussels

  18. weidong says:

    Barry:
    While most of your readers, including me, enjoy and benefit from your posts, there are few who hate these truth-telling posts.

    They will win if you get angry with those emails. So, why not let it go and smile through it?

    -Weidong

  19. Ant says:

    Barry -

    I know you don’t need us to tell you this, but IMO anyone who *doesn’t* piss some people off from time to time is probably doing something terribly wrong with their life.

    I am curious what the freaks sending you hate mail are thinking, however. Do they really hope to browbeat you into writing only favorable posts about their pet stock? Are they just temporarily off their meds and hanging around here for some reason? One would think they might spend that time researching better investment alternatives instead…

    If it gets to be too big a hassle, please feel free to share their email addys and IP addresses… I am confident that some around here wouldn’t mind taking on a new project. >:)

  20. michael schumacher says:

    Reading comprehension is at an all time low. The views expressed here and in the comments are not very popular with what the machine is trying to project……complacency. Until these views (or at least ones that take regular economic indicators into account) are expressed on a wide scale there will continue to be those who are angered by truth and (more importantly) the reality of it all.

    Being led to slaughter (perma bull viewpoint) is apparnetly getting a bit hard to support and that is shoiwng in the tape towards the end of the last several trading days. Coincidently it ‘s exactly how crude oil got to the point it’s at too.

    When the day’s gains are made in a frontal assault style commando raid with 30 minutes left to trade it’s not too hard to envision some pissed off people on both sides…..

    Keep it up BR…….

    Ciao
    MS

  21. The Dirty Mac says:

    Bullish or bearish or pissed off, there is such a thing as civility…as long as BR lays off the Mets and Jets.

  22. Winston Munn says:

    Don’t worry, Barry, they said the same things about “Son of Sam”.

  23. Robert says:

    It doesn’t take a genius to do the math – after the fact. But when you make a recommendation and it turns out great (short or long), take a BOW. Don’t worry about what the crowd says, because at least 50% will love you and 50% will hate you.

    And for those who disagree with you, make a market. BUY MORE FANNY AND FREDDIE. It’s cheaper, they are much cheaper, isn;t it?

    BUY MORE and prove Barry wrong. And when FANNY AND FREDDY GO UP BY 300% (make that 3,000%) in the next two years, send emails to Barry and say, “See, I told ‘ya so.”

    Tsk, tsk….

    I believe everyone who is entitled to have an opinion – should always put your money down on your opinion….

  24. CDizzle says:

    To the sheep that subconsciously believe that they are being “American” (or whatever) by emotionally lashing out against the unpopular voice of reason (with a solid track record):

    Past performance is not an indicator of future performance. Move along.

    hehehe

  25. Toro says:

    “Oh, and, it turns out that according to one emailer, I am “f$%^ing clueless.” My favorite was the one suggesting I should get cancer and die. ”

    LOL @ traders emotionally married to their positions.

  26. Phipps says:

    Barry writes:

    “The emails from numerous readers were fascinating. I learned some things about my ancestry that turned out to be less than complimentary; I got to imagine several hypothetical yoga positions that, unless one is amazingly flexible, appear to be impossible… Oh, and, it turns out that according to one emailer, I am “f$%^ing clueless.” My favorite was the one suggesting I should get cancer and die.”

    And now, they dine on his shorts. Compliments to Chef Bart Simpson.

    Anyway, I’m legitimately curious as to how Barry or his cyber-bouncer is able to keep the gibbons from throwing grubs and feces in the comments section. As we all know, Yahoo! and the other message boards are so full of this kind of crap that they are literally indistinguishable from some overheated pre-pubescent feeding frenzy over on Facebook.

    So Barry, how do you get all Kaizer Soyce on this crowd? I’m serious— Big Picture is hardly some remote corner of the Internet these days. And still I have yet to be called “Mr. Poopey-pants” in the comments section.