Congratulations, YOU now own Freddie and Fannie

[fdjake]

You guy's are ALL missing the point!!!!!!!!

WHY, WHY, WHY,  would the U.S. bail out these giants????  Is that the question you want answered????

VERY SIMPLE...............

YOU LET THEM BLOW UP................THE PLANET'S FINANCIAL SYSTEM GOES WITH IT!!!!!!!!!

Look.......The BUSH administration DID NOT want to bail ANY of these companies out.  The alternative is a financial MELTDOWN that would have blown up a lot of guy's reading this post. We would have had banks LITERALLY calling in mortgages.  Investors NOT buying and OWNING properties with 100% CASH would have gottn KILLED by insanely high interest rates.  I don't care if you have a SINGLE Freddie or Fannie backed mortgage your BANKS DO!!!  And THAT is the sole reason this was not about to be turned over to "market forces."

So we have a bail out of Bearn Stearns,  of Freddie and Fannie, Next up the U.S. Automakers by way of low interest loans.  Approx. $50 BILLLION worth.  Want to see the entire central part of America BLOW UP economically?????  Then just let GM, Ford, and Chrysler go belly up!
That will DESTROY that region of the U.S.  Let me repeat this......NO POLITICIAN, in EITHER party, wants to add KILLER OF GM or FORD, or Chrysler to their resume.  NOT GONNA HAPPEN!!

Gentleman......you can either GET ON THE TRAIN or you can wave to it as it goes by you???
The die has been set.  This is a DONE DEAL...

This is THE NEW WORLD OF FINANCE.  It's tied together on a GLOBAL SCALE.  If one goes down (especially if it's THE BIGGEST "one")  THEY ALL GO DOWN TOGETHER!!!  It doesn't matter if it's a country or a business your talking about.  Germany is IN recession, along with ITALY, ENGLAND, SPAIN, IRELAND, FRANCE and MOST of what's left of Europe.....WHY....because the AMERICAN ECONOMY has SLOWED.  This isn't MY opinion, this is DIRECTLY from the mouths of foreign economists.

So..........it looks like the "sub-prime meltdown" actually WAS NOT contained AT ALL.

It looks like the SLOW DOWN (really a recession, but that's a dirty word) in the U.S. that the experts said WOULD NOT effect other countries is actually KILLING thier economies.

It looks like the likely hood of a MAJOR U.S. Auto maker going BANKRUPT in this enviroment is HIGHLY UNLIKELY.  I'm sure seeing a 100 year old ICON like FORD, pad locking their doors and firing tens of thousands would do WONDERS for the AMERICAN consumers confidence and thus our economy....so there it is....the seeds have already been planted for the NEXT helping hand!!

Anyone here buy any PUTS in Fannie and FREDDIE????  They damn near ANNOUNCED this take over a MONTH ago!!  The puts went up 300% OVER NIGHT!!!

Who's smart enough to buy those FORD calls NOW????? 

[bcampbell]

Jake,

I have 5K I could invest in Ford. Would I simply sign up with Scottrade and buy as many shares as I could with it? This would be my first time investing money this way.

Thanks,
Brian

[christopher w]

bcampbell

A month ago Jake was ranting about how the new CEO of Ford was going to turn them into the new version of Toyota. Now it is the US Government that is going to complete the turnaround. You may want to do a bit more research before you go and drop your 5k. Jake (or Pete) has a history of ranting and raving about gloom and doom.

[HoldAndBuy]

Other than saving Fannie from collapse, can someone explain why everything is suddenly hunky dory now, according to the media? The way I see it the bad loans were just transferred from one place to another. (although I admit I know little about this issue)

[fdjake]

Let me explain this a little more....

A few months ago, I and a MILLION other Ford share holders, received a nice letter from BILLIONAIRE Kirk Kerkorian offering to buy ALL my shares of Ford at $8.50!! (I framed my letter and didn't sell a single share) Some people sold their shares........BIG, BIG mistake....but...like the real estate BUST, most didn't KNOW they screwed up WHILE they were DOING IT!!!    

Back to my point.......As oil prices shot to $147/barrel, SUV and truck sales tanked and Ford reported a big loss for the last quarter.  What wasn't widely reported was the MAJORITY of that loss was directly related to Ford BUY OUTS of employees.  Mullaly is shrinking Ford to match demand.  That costs MONEY.   Due to that loss....Wall St.  in all it's GLORY, reacted like they always do....they panicked....KIRK KERKORIAN did not....as a matter of fact old KIRK has been ADDING to his holdings at BARGAIN BASEMENT PRICES!!!  And so have I!!!

Bcampbell,  reread every post I have ever written here.....I let YOU decide who has been right about what we are currently LIVING THROUGH.

Here's my advice....This is a RISKY investment...  If LOSING a chunk of that $5000 is going to HURT you ......DON'T DO IT...
If it's just FU money then here is EXACTLY what I would do with your $5000.

Open your Scottrade account and have them send the paper work for an OPTIONS account.  Once it's open......Take what ever amount you decide and buy the Ford January 2010 $7.50 CALLS.  They closed tonight at .98 REMEMBER THAT!!! On Sept. 9th.  those options were 98 cents!!!  You can write back in when they double over the next year.  Then Thank me and we'll all see where we stand.
 
What your buying is the RIGHT to buy Ford stock REGARDLESS of price, at $7.50/share all the way out till January 15th 2010.  You can sell those options at ANYTIME up till january 15th 2010. As a matter of FACT, those EXACT options traded at $3.50 (almost 400% more) when Kirk made his $8.50/share offer!!!  If you decide to blow them out in a few months or a year for a nice profit you can.  But...You could LOSE too.  This isn't  "playtime" here.  It's REAL MONEY and you will experience real results.  Even if you DON'T invest....do me a HUGE favor and WATCH those option prices.   Remember...You can LEARN without investing a DOLLAR.

Watch what happens to those options (and the stock price) when the Feds make those loans.

What Chris is missing here is the fact that Ford will be cutting it's current loans rates IN HALF with this deal, as a mortgage broker he should know the value there.  He's obviously also missing the entire lineup Ford is about to bring to the U.S. from it's European division, which, by the way, MADE $800,000,000 in profit last year!!! Ford Europe builds small, fuel efficient cars that are incredibly well built. 
Take a look at www.autoblog.com for a review of the new Ford Fiesta that will be coming here in late 2009.  THEY LOVED IT!!!

NOTHING....NOTHING...has changed here as far as my opinion goes.  Mullaly is steering this company to a complete rehab.  He has already done it once at Boeing.  His model for that company?????  TOYOTA!!!  He suceeded there, and he will with Ford.  These events are NOT EASY for people to see.  People here flamed me when I said 3 years ago we would have the worst housing crisis in our lifetimes.  American car companies are whipping boys now!!!  If in 1979 I told you Harley Davidson would become THE most profitable motorcycle company on EARTH would you have believed it???  Remember...The 70's were the AMF years.  I remember going into NEW Harley dealerships and seeing BRAND NEW Harleys parked over cookie sheets so the leaking oil wouldn't get on the floor.  My grandfather bought a BOAT LOAD of Harley shares as soon as he found out who the new CEO was.  BUY THIS BOOK...... Well Made in AMERICA!!  It's the nuts and bolts story of the Harley turnaround...IT'S A CLASSIC
business story.

How did Harley do it????   They modeled themselves after......................

HONDA!!!!  They actually went over there and learned about..."just in time inventory control, and statistical operator control...which allows an entire assembly line to be shut down if ONE part is found to be defective.  This saves the company from having to fixOUSANDS of motorcycles AFTER the CUSTOMERS find the defect.....Funny isn't it??????  Harley RE-LEARNED how to build motorcycles from HONDA....and Ford is RE-LEARNING the car business from TOYOTA!!

Sorry Chris.... but your out gunned on this one!!! 
This kind of investing is CLASSIC contrarian.  BUY WHAT NO ONE ELSE WANTS, WHEN NO ONE WANTS IT!!!!
 
I'll let other readers here speak for my predictions on the real estate mess we're in and other matters.  It's not negativity....It's REALITY!!!

[Roger J]

Thanks Jake.  I thought I'd have to jump into a rant on why this is happening.  I almost couldn't wait any longer on you.

HoldandBuy:

The media is saying everything is "hunky dory" now because as a quasi-private entity Freddie and Fannie had investors that they had to answer to and thus, could not make the changes necessary to keep afloat and show a profit.  As government held companies, they do not fall into the same situation.

My guess is that now loans that are in default/behind will be worked out in some way that will allow (or at least attempt to allow) the homeowner to stay in the home and continue making payments.  That can be in a number of ways, such as a straight loan modification, a reduction in the loan or a reduction in the interest rate.  Things, in short, that were next to impossible as privately held companies.

If that works, it will a) keep a large number of currently defaulted notes from becoming REOs and thus off the market, and b) stablize a score of stable homeowners struggling to make a payment, giving them one that they can afford, thus hopefully, making them more inclined to purchase other things since they don't have to worry about struggling to make a too high mortgage payment.

Raj

[BrianA06]

This kind of investing is CLASSIC contrarian.  BUY WHAT NO ONE ELSE WANTS, WHEN NO ONE WANTS IT!!!!

Parade magazine had a story about Warren Buffet a few days ago.  He has a similar strategy.  If you do what the average guy is doing, you will make average money.  If you do what the average guy thinks is crazy, but you do it smartly, you make a lot more.  Buy undervalued investments! 

[DavidN]

I know you'd never hear this out of either candidate's mouth because they'd lose a ton of votes in a heartbeat, but it just INFURIATES me that we are being forced to bail out tons of people who were too stupid to understand their own finances enough to buy a house they could actually afford (both now and in a few years when their teaser interest rate changes).  People need to be responsible for their own actions.  

Absolutely,  Now how about giving us some interest back too?  I was smart enough to not go with a wild ass ARM and so may have paid a little more interest up front but can actually afford my loan,  so how about giving me back some of my money too?  

Guess it just proves that its always our issue to help and bail out the idiots.......

[fdjake]

I think your right on the money Roger...

Here's the bottom line...

SOMEONE or some ENTITY is going to take a hit...

What the hell is the difference if a bank forecloses on a home they loaned $200K on, boots the people out, then let's the house be sold for $100K to someone else????

Either way they take a $100K hit.

I agree with Roger....If the Feds let these people stay in the home, refi down to current market values and keep MORE INVENTORY off the market, prices should stabilize.

It's going to happen either way.  At least getting it OVER WITH will put some stability back in the financial markets.

I know a lot of people here would like to see this just left to market forces.....That,,,is NOT going to happen...for right or wrong...it just isn;t happening with THIS Fed chairman.  This guy literally wrote BOOK afetr BOOK about the depression and where the Goverment screwed up by NOT stepping in..

I deal in reality........What I WANT doesn't matter....what matters is what I GET.   You play the hand your dealt.  There is a play here....
It's the GOVERMENT as SAVIOR play and it's happening ALL AROUND US...  Are you guy's going to DEBATE it or make MONEY FROM IT!!

Come on in......the waters fine!!!!!!

Next stop for the money train........

DETROIT!!!!!!

Got my ticket........when are you guy's getting yours???

This is a CHANGE YOUR LIFE money opportunity here...and I'm not kidding.

[realnew]

One of my favorite ways to remember contrarian investing is to recall 2 things about people. People are greedy and forgetful. Greedy - see current mortgage crisis.  Forgetful - see S & L crisis.

Last week or so my boyfriend lamented how the markets are being spooked, thus driving up oil prices. I asked him, if you see they are being spooked, and driving up oil, then what are you doing to profit from it?

I believe the majority of folks here who are hesitant may have grown up with the morality/empathy spiel .... money is the root of evil, you don't profit from someone's misfortune. yadda yadda.

If you're astute enough to pickup on the market being spooked, or seeing how people are reacting to the mortgage crisis, auto buy outs, etc., then you're sharp enough to make money from these reactions. ...the psychology of the market.

when you panic, you cannot be rational. when you focus on doom and gloom, you cannot see opportunity. what your neighbor is complaining about, you most likely can profit from. listen carefully...

By the way, I posted recently about CHS chico's stores... they own white house black market, where Michelle Obama got her dress...

Another person in the news recently... Michael Phelps. His mom was at the olympics and on tv supporting him.... Guess where she got her outfits? Ya, chico's.  Know what they call her outfits now? The Debbie Phelps collection. Talk about psychology! I can see the soccer mom line forming at the mall right now...

[Funder]

You mean the government owns my Fannie?

I AM sorry for that one.

Mike’s absolutely right.  First we have Social Security and Medicare.  Now the government owns 50% of the mortgages in the U.S. market.  In my opinion this is a great country because we are capable of self reliance, resilience, discipline and innovation.  These very qualities are slowly being replaced by an entitlement mentality.  If there is a reason why Toyota and Honda are better than Ford, you can thank the United Auto Worker’s Union for that.
Pete’s (fdjake) absolutely right, and he has been for years.  If he’s preached a lot of doom and gloom, it’s a reflection of this market’s reality.  I was recently reading about  the 1980’s, when Michael Milken sold the idea that loaning money to small corporations ,in spite of a higher rate of default, could be profitable because corporations that didn’t default will pay higher interest rates, and therefore, cover the non-paying borrowers.  When corporations could not pay, they simply issued more junk bonds, raised more cash, and paid the interest expenses on outstanding  junk bonds.  They even decided to mix higher risk and lower risk tranches into collateralized bond obligations.  These bonds were particularly attractive to Savings and Loan institutions and Thrifts.  That sounded familiar to me.  It sounded like the game we were playing with Freddie and Fannie, and it sounds like the game we are playing with United States Treasury Notes and Social Security money.  Same circus, different clowns.  Those are Pete’s words, but I wish they were mine.
Do you know what the top-selling foreign auto maker in China is?  GM.  Do you know what that best selling vehicle in the U.S. has been for 17 years running ?  The Ford F-150.  Russia is now Europe’s largest car market; and the best selling brand in Russia?  Chevrolet.
We would be absolutely stupid to let market forces take control of these giants and allow them to go down in flames.  These are business that promote a huge amount of wealth around the world, and if they go down, we will all suffer.
This is exactly the kind of financial gimmickry that lead Japan’s economy into a decade-long recession with overnight lending rates of 0%.  Business bails out government, government bails out business…same circus different clowns.  I don’t want to hear the government say they refuse to bail these businesses out.  I don’t want to hear the government say they will raise taxes and “fix” the problem.  I want the government to say that they will intervene, but they will set up systems of transparency and accountability so these kinds of problems will not happen again.

Otherwise we’ll all keep praying for just one more bubble.

[BrianA06]

Take a look at www.autoblog.com for a review of the new Ford Fiesta that will be coming here in late 2009.  THEY LOVED IT!!!

I read your posts and I know you do your research, but I just saw this on the CNN main page.

http://www.cnn.com/video/#/video/business/2008/09/09/westhoven.ford.65.mpg.cnn

I have to say, I never found any ford vehicles matched the standard of European or even Asian companies.  And a 2-door car becoming widely popular with anyone who has at least 2 friends or relatives?  I have been to Europe and yes it may be popular there, along with Vespas and scooters.  But in America where the average person is officially classified as obese?

[fdjake]

Your right Brian......100%

Listen, I owned a Used car dealership for 15 years and sold NOTHING BUT HONDAS and TOYOTAS!!  They run forever.  But we're not talking about CARS here.....we're talking about an INVESTMENT!  Two COMPLETELY different things...What do you think wil happen to the price of Ford stock when they are selling cars people actually WANT TO BUY!!  This isn't about a small 2 door car becoming wildly successful.  It's about a COMPANY learning to BUILD what their customers WANT!!!  It's about ALL Ford's new models and the impact they'll have.   Remember this...........If you take NOTHING else away from this here it is...........FORD DOESN'T HAVE TO BEAT TOYOTA????  Ford just has to beat FORD!!!  Get it???   If they do BETTER than they are doing in 2008 when 2010 rolls around.....that stock goes to the MOON!!!  Wall St. LOVES to compare this years earnings with LAST years!!  THAT........is the beauty of this investment!!

When oil shot to $147/barrel it CRUSHED the stock prices of Ford and GM.

Now here's the interesting part.....WHAT WERE WE TOLD ABOUT OIL PRICES????   Anyone remember???

I DO.................IT'S DEMAND FROM CHINA....NOT SPECULATORS.

Now, of coarse  we have hedgefunds going under every week because it WAS speculation that drove oil prices to record levels.  Now that oil is on the verge of breaking below $100/barrel the HEDGE FUNDS themselves are COLLAPSING!!

So..........we have OIL in free fall.....Remember...THIS was the reason for the big drops in Ford and GM's shares this summer.  That's OVER.  I saw a guy on CNBC this morning saying Oil was headed to $50/barrel!!!  So there's a HUGE wall that just fell apart.
But now the dopes on Wall St. are WORRIED about Ford and GM having enough CASH to ride out this recession.  But wait???  What's this Goverment loan stuff????

Is the light starting to go on???  See it???  It's there...faint...I'm trying to lead you to it guy's.
If the 2 biggest factors OIL (now NOT a factor) and CASH (which the FEDS are going to provide at BELOW MARKET interest rates) have both been addressed, some one show me how these companies DO NOT survive!!

The thing you CAN NOT FORGET is this..........

FORD doesn't have to BEAT Honda and Toyota.  HARLEY sells one fifth the number of bikes Honda sells.  YET HARLEY STILL MAKES MONEY!!!!! LOT'S of it!!
THAT...is all Ford has to do........SEE IT???  They become PROFITABLE and the stock will go CRAZY because almost NO ONE expects this to happen.  And the absolutely amazing part of this is FORD makes MONEY in every country they sell cars in EXCEPT the USA!!!  Fix THAT and you FIXED FORD!!!  Uncle Sam is about to help!!!

Ford was TOO BIG, they built too many cars.  Mullaly has taken an AXE to this company.  They WILL be profitable because they WILL have HALF as many dealers, selling BETTER cars.  No more health care payments for retirees, no more selling THOUSANDS of cars at a loss to rental companies just to say "WE sold more cars then Toyota"  It was all BULLSH*T.  Those days are OVER.  You need to look at what is COMING.

As far as Americans NOT buying small fuel efficent cars.  Toyota just sold it's 1,000,000th  Prius.  The UGLIEST car on the road today.  As far as the two door cars go.....Ford is bringing the Fiesta here in a 4 door sedan, a 5 door hatch and a 3 door hatch.  They also have a version running right now in Europe that gets 70 MPG!!!!!!  Toyota gets $25K for that Prius.......I think Ford will sell as many Fiesta's as it can build and they'll make MONEY on EVERY one.  For the first time in YEARS Ford is actually making money on the Focus (and selling every one it can build, 2 shifts added to that plant to kepp up with demand)

REMEMBER....................Out of the park, home run investments, are built on the ability to SEE what is coming, and set yourself up inorder to PROFIT from those upcoming events.   The cuts have been made, Consumer reports now ranks FORD EQUAL with TOYOTA on quality.  Oil is falling, the U.S. Goverment is about to hand Ford a BIG FAT loan check, and at some point this economy WILL recover.   The BEAUTY of these cycles is historically in EVERY SINGLE RECESSION.......the very first thing people buy when they feel the economy and their jobs are stable is.............

a new car!!!!!!!

I expect my net worth to rise dramatically within the next 4 years based on this investment.  I now own or control over 60,000 shares of Ford. (while everyone on Wall St. was running for the doors I've been buying at BARGAIN BASEMENT prices)  And........the stock is STILL at $4.50/share!! Now's the time boy's!!! The beauty of this investment is the upside vs downside risk.  I have, through the purchase of options, and stock, control those 60,000 shares of Ford at a total cost of just under $70,000.  You do the math.....Uncle Sam makes those loans, Ford survives, they ride out this down cycle, and maybe the stock goes to $15 or $20...maybe a LOT higher....multiply either number by 60,000.....Then show me a 3 family home that returned those numbers for you???   Remember..........my TOTAL investment is $70K.  How many of you guy's have your named signed on a dotted line for a whole lot more than that??  I don't get calls at night from my $70K, I don't have to evict my $70K, and my all time favorite....when I want to SELL this investment?????  Let's put it this way.....it took me longer to write this sentence than it will take to sell the entire 60,000 shares!!

Same circus, different clowns!!!

Chaa  CHING!!!!!!!

Hope I didn't "RANT" too long on Ford. Cripes some people JUST DON'T GET IT.

I have had NUMEROUS people here BASH ME, then, AMAZINGLY, they PM me and ask if I'll manage THEIR MONEY FOR THEM

I DO NOT manage other people's money.
I DO NOT have a BLOG.
I DO NOT sell books.
I DO NOT do seminars.
I DO NOT want to partner with you on a split for stock advice.

IT'S ALL FREE!!!!!   That is THE ONLY WAY I keep any credibilty.  This is not costing anyone a penny.  It's all laid out here for the BUBBLE!!!
It amazes me when I read comments like christopher w's!!! 

Some people just don't get it.

[propertymanager]

I agree with you in principle.  However, this clown show can NOT go on forever.  The United States government is printing money like it's going out of style and this money isn't based on anything other than thin air.  It is no different than a person who is broke simply writing some big amount in their check register.  He's pretending that there's a bunch of money to spend and can indeed write a bunch of checks, but they're all going to bounce.  The US government is doing the same thing.  They're writing checks with money that doesn't exist, hoping that no-one will notice (very few do).  There isn't anything to back up these bad checks other than the government's ability to tax the citizens.  The only teensy weensy little problem is that the citizens are maxed out and can't be taxed much further.  That's why inflation has reared it's ugly head and why we are (100%) headed for a crash of unprecedented proportion.  Since the government can't tax us to raise the money for the bad checks they are writing, they are taxing us with the invisible tax of inflation.  A CRASH IS a certainty and is ALWAYS the result of the government printing fiat money.

Yes, the clown (the government) is going to fight to keep all the balls in the air.  Yes, only a few balls have hit the ground so far (IndyBank, Freddie, Fannie, etc).  However, with each bailout; with each "printing" of more fiat money, those balls are getting heavier AND the number of balls is increasing.  At this point they are the size of bowling balls and the fed is barely keeping up. 

The price of crude is down about 30%, but gas prices are only off about 10%.  Did you notice that?  That's because gas prices didn't keep pace with crude prices on the way up.  Gas prices are still very high.  Heating prices will be off the chart this winter.  Layoffs are starting to pick up and good jobs are headed overseas.  The baby boomers have started to retire and soon there will be an avalanche of these retirements.  There is no money in the invisible social security "lock box" and medicare is rapidly going broke. 

If all that isn't enough, Russia is once again causing trouble and has the oil money to back up their talk.  Let's not even think what's going to happen when Israel is forced to attack Iran - that MUST happen soon!

This thing is not over - IT HASN'T EVEN GOT STARTED.

Mike

[BrianA06]

This thing is not over - IT HASN'T EVEN GOT STARTED.

Mike

I think that is pretty on target.  We arent close to a bottom.  Maybe a plateau or even a small rise, but we are headed for disaster down the road.  Companies are cutting jobs to try to save themselves.  And the winter is coming, heating oil and construction layoffs.