Freddie Mac and Fannie Mae
This excerpt from the wires struck me today:
Shares of mortgage finance companies Freddie Mac and Fannie Mae continued their plunge Wednesday as investors are increasingly convinced that the stocks will drop to zero if the government bails out the troubled companies…Fannie’s stock is down 87 percent so far this year, while Freddie has lost 90 percent of its value.
I have a question: Isn’t dropping 90% close enough to dropping to zero? Do you hang around for the last 10% down as some form of perverse “hanging on for the rebound”?
Petter Added:
August 20th, 2008 at 12:37 pm
Not close enough. They can still fall 90% from here. And then 90% down from there…
Matt - Trading System Reviews Added:
August 20th, 2008 at 5:36 pm
Michael, I am shocked an appalled!! ;-)
Surely though, when the trend ends is when you get out…if it’s still trending then stay?
After all if you short at $5 and it drops to $1 then it’s another 80% gain…
Mark Mueller Added:
August 22nd, 2008 at 4:09 pm
Wall Street never changes,The markets change, the stocks change, the suckers change but wall street never changes because people never change; that’s because of greed, fear, indecision and hope. Wall Street never changes because human nature never changes… Words of wisdom from Jesse Livermore. Why be greedy? I’ll take the first big move.
Roger Added:
August 22nd, 2008 at 5:18 pm
Not sure about that last 10% but on my charts, the lower band of the Bollingers is current negative! If you ask me, the real short should be soon after the week of June 22, 2007 … if you missed it you missed it. That is trading.
Then again, if you short it at $5 and it goes to $0.01 …. I dunno where you place the stops though if you want to short at $5.
Ken - Todays Breakout Stocks Added:
August 22nd, 2008 at 11:38 pm
The point is why are the longs who have already lost 90% of their investment suddenly becoming concerned about it going to zero now? The shorts aren’t being greedy, they’re just following the trend.