Fannie Mae?

Question

As I'm sure everyone knows, Fannie Mae took a big hit in the market today, down 40% at the opening, in my fantasy portfolio I bought it around $8.50, now its down 25% on the day and at $9.69. My question is, is it typical for stocks that open very high, or very low to gain or lose back a bit during the day

Answer 1

Sell now while you can.  You'll be down 50% Monday morning.

Answer 2

Unfortunately, nothing is typical in the stock market. If it were we would all be able to make such predictions and all be rich.

My experience is that stocks that open pre-market on bad news open at the lows of the day or within in a few minuets hit day lows.

Then they have a Dead cat bounce

http://en.wikipedia.org/wiki/Dead_cat_bo...

Then they go and retest the lows, sometimes a bit lower and depending on the news may move higher.

What happens after that depends on sentiment, market forces, geo political events, and other factors.

Answer 3

Fannie is on the ropes, but that leaves our government with a problem.  It is going to be stuck with 17 trillion is mortgage debts if Fannie and Freddie go under.  Our geniuses at the treasury and Fed will attempt to concoct some way to maybe prevent that from happening.  When they come up with one of their hair brained schemes that would be a good time to bail out. Might happen this weekend.

Answer 4

A lot of times they do over react to good news or bad news.  FNMA may have over reacted to bad news at the beginning of the day.  They will probably recover some in the short run.  But it may be a very long time before they recover fully.  They have lost a lot on mortgages, and it will be a long time if they ever earn all of that money back.

Answer 5

loose but they will rebound