Replies to post #39692 on Fannie Mae-No Politics (FNMA)

[955]

Words from a veteran trader and a dose of reality.

[skidoo31]

FNMA will up list soon, another catalyst that will keep driving pps up!!

[Gratefullife]

Very plausible post

[MonestHind]

"(this could crash as fast as a P&D; so our return most exceed 15% a day to hold this based on my models)."

Great insight here.

[HappyAlways]

Agree and thanks for your valuable inputs. Would like to supplement 2 points.
1. Fannie will remain status quo, until new FHFA head is appointed. Before passing the $10 post, it will still be a happy land for day traders.
2. Hedge funds are not necessarily long-term. If their current holding has 100-200% profit already, they may sell to reap the intermediate returns and short-sell to replenish their holding. IMO and GLTA.

The hedge funds will take this to court and must have a chance to win otherwise they would not be purchasing the commons; however, I expect the government will drag this out. The hedge funds are real investors with long-term horizons - I am just a day trader and in my experience, stocks like this spike and then fall while legal issues are sorted out. This will not be resolved in the short term; it is one of the most complex deals in US history with major political and economic ramifications. Retail investors have no way of valuing this stock; we lack critical inside knowledge and can only make wild speculations.

The good news is, we are in the middle of the spike right now, and it should continue to be strong (already has been - 600% YTD). Hedge fund investors aren't stupid and will only take this so high - then we will rely on retail to inflate the price to an unknown level until it falls back to what the institutions are willing to pay based on real analysis. For us, the key is to not be greedy. Take a nice return in proportion to the risk taken for holding this stock for any period of time (this could crash as fast as a P&D; so our return most exceed 15% a day to hold this based on my models). Day trading is a business - treat it as such and you will succeed. GL