Fannie Mae losses mount and investors are excited!
May 6, 2008 Leave a comment
Strange are the ways of emotional buyers/sellers. When the govt backed Fannie Mae declared unprecedented losses of $2.57 a share I was expecting the market to react to the arrival of the “Great Depression” ( which has been due from October according to the analysts). The stock’s gone up to $30 and looks like nobody cares anymore.
Apparently, big losses, dividend cuts , stock sale to raise capital do not factor into the strength of a company. I am not an investment guru, but why would someone invest in a company which is laden with debt backed by worthless collateral?
May be Vik Jain can provide some insight!