Fannie will be a good buy in January of 2009.
Maybe, but right now I would avoid the financials and housing stocks like and terminal social disease.
Maybe.
The big question between now and then will be whether they’ve cleaned up their books since being busted for sloppy bookkeeping — or are they hiding a mountain of trash in their portfolio?
The big moral hazard in Fannie/Freddie is that too many people think that the government backstops them, ie, they’re as good as FDIC-insured. They’re not. There is an assumption in the markets that the Congress would bail them out... but that is all it is... an assumption.
As a result, their bonds (mortgage-backed securities) in the market command a higher credit rating than what they might have if people treated them the same as say, Countrywide or WaMu.
It will be a great buy in 2015 three years after 2012 the Mayan apocalypse
But no one knows how to value Fannie or what its actual earnings are.
Citi Group is the buy, 5% yield and too big to fail. Januray 2009 sounds about the right time too.