Does the Freddie Mac US treasury bailout mean that you will lose your stock?

Question

I have 100 FRE shares.

Is it better to sell them off for less instead of waiting until a bailout happens?

Answer 1

Assuming there is a bailout, then it would be wise to get rid of it. If there is a bailout you will not lose your stock, it will just may become worthless.  The government does weird things though as in the case of Bear Sterns for example.  Instead of letting the company go under they paid another company to take it over and the share holders actually came out better than they should have.  Of course at the tax payers' expense.  Right now the government is in bail out mode.  Bail out the Wall Street brokers, bail out the real estate speculators, bail out the auction rate preferred investors, bail out the retail stores.  You name it they will probably bail it out.

Answer 2

The way things look today I would say sell it and run for the hills.  Freddie and Fannie securities are the leading losers today.  They are the last havens for the bad loans in this mess and it looks about to crack.  The government could recapitalize them and wipe out shareholders.

Answer 3

If anything the bailout will help insure that the co doesn't go bankrupt. Therefore you're shares are supported.

In terms of when to sell, that could have more to do with the financials as a whole. They've been weak recently. In fact they're at their support lows. If FRE break 3.89, look out below. Frankly this isn't a stock I would want to own.