10:11 AM Fannie Mae (FNMA.OB +31.5%) and Freddie Mac (FMCC.OB +26.9%) continue a torrid run, now closing in on quadrupling this week. Buy the stocks for a trade, but the idea there is any value at all in the common when it's likely the preferred may even be worthless is "just insane," says John Hempton (an owner of the preferred).
Common sense makes most human being to be a fool .
Such common sense are called and to spread by a market trend regulator in the peak time of a stock movement alway.
Therefore the one made fool is going to turn the whole ship in which the one is staying
I am a fool in making choice and action that means you are not.
This guy needs to be investigated. He started this shellacking and we need to know how short he was. The SEC needs to get all over him. FNMA is now a legitimate story and this stock has no limit right now.
Just read your article on pfd vs. common shares of Fannie and Freddie. Your argument against owning common shares are the same arguments *against* owning pfd shares. (The only argument *for* pfd is they're first in line. But the "fate" of Fannie and Freddie is binary; either the govt. violates the fifth ammendment or Fannie and Freddie survive, making both pfd and common a value one day.) Note too that the political gamble you cited is identical for both. Yet the political gamble was deemed "just insane" with respect to the common, but why not the pfd then?
Moreover, without further argument it's a dubious claim that the "longer shot" of making sustainable gains with the common stock does not offer a greater payout than pfd. Notwithstanding, my main point in writing you is that the reasons you cited for it being "just insane" to own the common rather than pfd shares was not argued cogently, it was just asserted as a thesis and then repeated. Indeed, the insane reasons you cited for owning common shares - every one of them, applies to pfd shares too. But for some reason that point is never mentioned by Mr. Hempton (and now you).
(end of email)
The reason for the volatility is because there are too few longs that get the concept that to own commons is very *sane*! Once the taxpayers are paid off, no such absurd article will keep people from buying.