Buying Freddie Mac

[leahcim]

Is this a dumb idea? I read democrats would prolly keep the company around to allow low income people to get housing. I'm predicting obama is going to win the election, and there is a dem. majority in some part of the government or something.

Its like $1.17...I'm putting at least 5k into index funds, but part of me wants to put $1k in here and see what happens. Maybe the gov. would limit the share price to stop people from profiting on a bailout?

FRE - Freddie Mac - Google Finance

 

[FIRE'd@51]

It's quite speculative, but I think it might make some sense. I would seriously consider buying Fannie below $1. It was selling at 7 when the Feds put it into conservatorship. Since the Feds now own 80% of it, one could argue that it's worth at least $1.40 today (20% of 7). The Feds are going to let FNM and FRE grow their portfolios through 2009, and James Lockhart (head of OFHEO) said yesterday that the Treasury could buy some of their bad mortgages. The earnings hurdle will be covering the dividend on the preferred stock the Feds now own, so they can pay a dividend on the common.

For the record, the Dems have historically been staunch supporters of FRE and FNM, even though they would like the public to believe otherwise.

 

[leahcim]

Thanks for the reply. I'm currently look in to putting all my 6k into GE. It's at like 19$ a share. Fannie/freddie seems more risky than GE. I think eventually GE will go up. Any thoughts on GE?

Thanks again

 

[cute fuzzy bunny]

Fannie/freddie seems more risky than GE.

Just a little. Jumping in with GE vs Fannie/Freddie is roughly equal to hopping in the water with a guppy or a 30 foot great white shark.

Go the latter route, I think you're gonna need a bigger boat.

I may post some pictures of captain quint.

 

[FIRE'd@51]

Thanks for the reply. I'm currently look in to putting all my 6k into GE. It's at like 19$ a share. Fannie/freddie seems more risky than GE. I think eventually GE will go up. Any thoughts on GE?

Thanks again

Fannie/Freddie are much much more risky than GE. Without knowing anything about you or your investment portfolio, I can't give you any meaningful advice. If you only have 6K total and no investment portfolio, I would say put it in an index fund. If your are retired and are looking for income, I think GE is attractive with a yield of nearly 6.5%, and a good possibility of future dividend growth.

 

[leahcim]

I'm 19, have 6k to invest now. 1k in savings account, will have 5k in 1 month that I am going to put in vanguard total stock market index. I already have large cap mutual funds. I'm thinking I'll do all the money in GE... or 5k in GE and 1k in fannie. I've never bought stock, but I'm looking at zecco. I'm thinking I just make a limit order of like 18, then I won't buy unless it is 18...Is it that easy?

Thanks

 

[cute fuzzy bunny]

 

[FIRE'd@51]

I'm thinking I just make a limit order of like 18, then I won't buy unless it is 18...Is it that easy?

Yes, if you put in a buy limit at 18, it will only execute at 18 or less.

 

[dm]

I just bought some FNM at .70 cents. This is just gambling money and I bought a thousand shares. A thousand shares use to sound like alot. Not so much these days.

 

[dm]

Just an update, I sold at 1.95 just before it went over $2.00.