1. The most valuable asset of the GSEs are the CEOs, upper management team and the large body of employees. They make the earnings, profits happen. Since 2008, there have been many changes in GSE basic operations with the MBS market and others and this has led to the existing earnings, profits.
Once the Acting Director DeMarco is removed and replaced with Zandi, the FHFA control may be more in line with moving the companies in a positive manner instead of strangling them as has been done. And the amazing thing has been that though hobbled by the conservatorship leadership, the GSEs have surpassed all expectations. A good sign.
2. FNMA and FMCC are at the moment the best common stocks at these prices to invest in for those going long. The pps is more than affordable and a long term investment now will create a huge nest egg for the future. Ordinary citizens can invest and have a secure economic futures. Pre-2007, this was the case and institutional and mutual fund investment in the GSEs was huge. Post 2008, that sort of investment was gradually lost and in its place came speculative day and swing traders taking profits whenever they could and MMs churning the market within trade ranges making money from fractional cent trades in a variety of ask-bid spreads. That is where the common shares trade today. Is churning recognized?
3. The trading behavior we observed over the past 5 years is determined by the limited type of trading participants mentioned above and it will change not because of impressive GSE earning reports or profitability. These sorts of news only spike speculative profit taking trading and short selling with the occasional short squeeze firing up a large increase in pps that is always walked down later by MMs so that another low price to higher price bout will occur. Check the long term charts to see this pattern.
4. This trading behavior will change when buyers holding for the long term restrict the supply of shares so that substantial demand occurs. The price will rise significantly and the common shares will move back to NYSE where it belongs.
5. That will occur when the future trajectory of the GSEs as independent companies outside of the conservatorship and the condition of the warrant on the common shares has been clearly determined and enacted. This will eliminate most of the profit taking speculative trading so apparent on this board.
6. Speculative trade will continue but the majority of the shares and trading will be in the hands of long term investors building an economic future.
7. To encourage long term investorsto purchase FNMA and FMCC, the pumping rhetoric displayed on this board needs to change to a presentation of realistic and accurate investor information. Serious investors will not believe in or buy shares based on the screaming of positivities and wildly hopeful future outcomes based on information that can be misleading or insignificant in the long run.
8. For those seeking an economic future, be informed, get serious, and go long and hold with one eye always open on the changing financial facts. Speculative day and swing trading, short selling, and MM market making will continue to burn and churn up and down as it is a needed part of the trading environment. However, going long and holding in greater and greater numbers is the only way to have a steady increase in pps.
9. The Republican party is fighting to reduce and end the GSEs. Nothing good in the long run for the GSEs will come from their proposals. They are in principle opposed to GSEs of this size and capability. They are not interested in profits or earnings of the GSE. Their concern is about market monopoly and free market competition which they believe happens by handing the MBS market over to private enterprises.
10. The Democratic Party wants to make housing affordable and favor the GSEs. However, there is little public effort to reform the GSEs and to balance the share of the housing finance market with other private companies.
11. These two parties create an artifical divide between them based on partisan politics that hinders progress and hurts the American people. They simply do nothing creative together to resolve the issues that were made clear by Fannie Mae's Tim M. The solution is simple. Reduce the size of the GSEs and their current monopoly in housing finance and streamline GSE company goals to serve the housing finance market in open competition with companies that demonstrate an interest in serving the public with regulations hinder private companies from engaging in predatory housing finance practices.
AI
