Thursday, July 10, 2008

Sell now?

Great article on a doomsday scenario that would put the US in a DEPRESSION if FRE and FNM continue there death spiral. Don't be a dumbass and buy these stocks just because they LOOK CHEAP. Things can always get cheaper, just like oil can always get more expensive.

I was listening to this old interview with Jim Rogers.
He says, abolish the Federal Reserve and tells Bernanke to resign. (Ron Paul has the same opinion, Which I agree with)
He says Recessions are like Forest Fires. They clean out the excess, and we start out fresh again. He's been short investment banks and long Ag commodities (the real commodities, not the bullshit stocks). Clearly people have been following what he's been saying.

From a technicians view point, the SPY is only at the 38% retrace from 2003-2007 time period. It may be getting time to bounce, but in the bigger picture, we may very likely be headed to the 61% retracement point.


Anonymous said...

I don't care for Bernanke but the Federal Reserve does keep those recessions in check as to not become depressions. It is better to have 3% growth consistently than 10% and zero or negative. Maybe that guy needs a refresher course in Money and Banking.
As for Fannie Mae or Freddie Mac I haven't bought any but one thing my college finance professors always said is they would NEVER go bankrupt as gov't companies. Funny, they got fined for making too much money and were underreporting profits only to be almost insolvent. The whole mortgage industry is through them so far more important than Bear Stearns could ever have been. Government WILL bail these guys out if necessary.

HPT on 11:05 AM said...

I think FRE is already technically bankrupt, considering they have over 7 billion in writedowns and no capital. There stock is even lower today and looks to be going lower, so there ability to raise capital by making a stock offering is bad. Same goes for LEH. When the Fed raises rates, it may prompt investors to start buying up more homes before mortgage rates go up. I think this may have a dual effect in helping the mortgage companies recover, housing prices to stabilize, and the US dollar to rebound. The Fed needs to raise rates and stop bailing out bad companies.

Joe on 11:51 AM said...

ANON -> the gov. might bail them out, but the stock will still go to "zero" ;)

Anonymous said...

I'm reading up on it in Bloombergs...the fed'l gov't can't take over the $1.5 trillion portfolio as it'd have disasterous results on the dollar obviously by doubling their debt obligations or something. Talk of moving them to an LLC and allowing those 2 to start over. These companies need to survive it'd be on par with losing the Postal Service. THIS more than anything proves how awful the housing market is...they guarantee well over half. Its gov't regulator says its fine unless a panic which could doom any company. I would expect a 500pt DOW drop if even a rumor of bankruptcy...what a time huh fellas.

Anonymous said...

You heard that? Interest rates went up to 20% in 1970s to get rid of inflation.



Bluedog on 7:38 PM said...

Great interview with Jim Rogers. Thanks for the post. I might have to see how DBA is doing. Early July I decided to cash out after seeing more and more signs that it's going to get worse before it gets better. That SPY chart also makes me very nervous. I think we're f*cked and our adminstration is clueless.


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