For a long time investor, is buying fannie or freddie now a good idea?

Question

There is no way they are going to collapse, goverment has to back them up, and well the economy is not going to stay in the red, so investing in a company that wong go belly up and is a leader in its sector is a no brainer for a long term investment right? (sorry for the runon sentence lol)

Answer 1

Only if you like to speculate.  

S&P placed both on credit watch today.  They may be getting gov't support, to ensure they don't fail.  But that doesn't make the stock a safe investment.  It can still go down.  And keep in mind the gov't wants to prevent the economic impact that would result if they fail - not protect you.

Answer 2

This is the same logic that applied to Bear Stearns and the shareholders are still regretting that purchase. This is like dancing inside a lions cage and hoping that he has just eaten. If you're wrong there is no recovery!!

Answer 3

Now is a great time to get into one or both of them.  Just dont put ALL your money into them.  But yes the government pretty much HAS to back them up, or the economy will actually get worse then its current state.  

They are pretty low now, however they could go lower, and you make see pretty big fluctuations for 2 years (at most probably), until start to steadily go back up, but no doubt, they are a good investment for long term (5 years).

P.S. Net advisor is right also..they wont collapse, but government could take over.  Personally, i highly doubt that though.

Answer 4

There are still too many Black Boxes in financial stocks in that say contrasted with Yahoo or Proctor and Gamble you don't know really know what financials hold

Be patient and let things sort themselves out

If Mutual Funds, hedge funds, etc cannot figure this out, we average joes sure can't

Answer 5

It is time to gamble on real estate. Get one and live in it. Dont need to rent.

Answer 6

I agree, the USG/ The FED won't let them fail, however shareholders could be wiped out if the gov takes over the banks.

The US  Gov does not guarantee the value of anyone's stock price, even if a take over by the Gov.