Most seem to think common shareholders will be brushed aside based on these court cases. It seems that while the past is important to partly focus on, it is not the be all end all, especially with the current administration. Perhaps this is my biased rose colored view.
If we focus solely on the future, it looks quite bright, with individuals in administration that seem to realize how important the GSEs are to the housing industry. Stemming from the belief that there is truly no other entity to replace them and if they were to create such an entity that it would just be a replica of the GSEs now.
As far as common shareholders go, the single issue of concern is in what manner and how will they will be treated in GSE reform? Court decisions will affect but not determine en toto GSE reform brought about by the new administration and/or Congress.
If all the court cases are lost tomorrow, what will change besides the share price collapsing for all type and series of stock? Shares of badly devalued stock will remain.
It is GSE reform that counts in this end game, and at the moment, there are the same plans and people promoting them that have been circulating since 2011, all of which are known, plus the unknown plan and actions of the new administration. The latter is key and there is nothing to do but wait to see what it is.
Frankly, Blushing green, the type of view one holds now is irrelevant. These matters do not depend on investor views, opinion, predictions, expectations, wishes, hopes and dreams.Things will go forward to some end regardless of these.
Without doubt, one's investment is threatened with events like these that have the immediate effect of devaluing the share price and stimulating the transfers of million of shares between hands weak, strong and indifferent setting up future roller coaster share price moves. It has been seen before.
For long term investors, this delivers comparatively different impact depending on the present cost basis and/or cost recovery. Those with a very low cost basis see this as one more of the same and feel no threat. There is even less threat if the shareholder has already recovered the entire cost of buying the shares and all price improvements are profit.
From there, those with higher cost bases and having differing degrees of cost recovery will feel less or more threatened...
A story.
There is a friend who is an avid, experienced craps gambler. I go along with him to casinos for a fun time. I never gamble, ever. No stomach for it, for losses, for the roller coaster of probabilities, odds, making bets, hanging on for a comeback using higher bets. He can handle all of that.
I did a thorough statistical analysis of his craps results. I thoroughly documented table types and action (time of day, location, max and min bets, numbers of patrons, patron discipline, verbal behavior, betting methods and throwing styles, winning and losing behaviors, throw results, pit boss and stickperson behavior. etc.). We discovered a winning setup given his specific throwing talents and betting method. He keeps accurate records of his outings. He consistently beats the casino and walks away with hundreds of dollars in 20 minutes to 2 hours of craps. Losses occur but not in the overall scheme. When the setup is not followed in a disciplined manner losses creep in.
Even so, with all the research and prep, the singular rule that is most important in gambling games like craps (this game has the best odds in a casino) is to never play hard and fast with money that is needed. Seriously play in a disciplined manner only with winnings and never with needed initial capital. If and when these winnings ever run out, then it is time to stop and reasess.
