I Just Scared Myself

 

You are now my nominee for Federal Reserve Board Chairman!  And you know a hell of a lot more than Barney Frank who proclaimed one year ago that Freddie and Fannie were in good shape.

 

I was just googleing myself to see if there are links to my Facebook artist page and found this review I had written a year ago on my Updown stock account.

Stock Pick by Tijs Limburg

FNM: Analyst Consensus: Sell (Short) Stock

Posted 366 days ago on 7/14/08

Market call:FNM will go DOWN
Target: $6.00 on 8/14/08
Current: $0.61 (-93.87% from time of market call)

 

Goldman Sachs analyst Daniel Zimmerman just announced this morning he expects the stock of Fannie Mae to drop about another 35%, and I highly disagree with all of those who are saying that a Fed "Financial Stimulus" will fix the stock. The only way the stock can benefit short term from the Fed in my mind is if the Fed were to buy out the company's shares. We have at least a few weeks before the Fed would take such action if necessary. Right now, the only thing that they can do is flood the company with cheap money at the discount window and help them raise capital through bonds. But we must remember that while that may help the company balance sheet, stocks are somewhat disconnected from the companies they represent. Right now, sentiment is very much against this stock -especially in the powerful and large investment firms- meaning that, short term, no one is going to start heavily buying this stock, meaning the short sellers are going to prevail. There is so much more money going into shorts right now that it would take large sums of money to get the stock to move against the pressure. Take for example Jim Rogers, who says he is keeping his short position open on this stock, and will sell more stock short with any run up in price. As the chairman of Rogers Holdings, I will take his word for it that he will put a lot of money behind that short position, especially with analysts saying the stock could see another 35% taken off. Any aid given to this company will take a while to get the money flowing again. An over-the-weekend bypass to the insolvent company will not immediately solve the problems. But don't get too greedy here, once you have a large gain, take it, especially if you start seeing declining short interest.

 

 

And after I had gotten bombarded with messages about how negative my analysis was, I posted this response on 7/14/2008.  Looking at this statement a year later with everything in perspective is kinda scary:

 

We're in a bear market, so get over it. It's only negative to the buyers because they're on the other side, buying the stocks everyone else is selling short. These financial companies, especially Fannie and Freddie, have been mismanaged for years and are finally getting what they deserve. The confidence in the financial sector has turned to the sellers. We are confident that the market will get worse for financial stocks. It's only July. Just wait till September and October roll around. People are already shifting their money to stronger banks, and dispursing money across multiple FDIC ensured accounts. That means there is actual fear (not media generated), and fear is what drives bear markets. We've already seen one bank fail...

 

I made a 93% gain to date on that call, but I wonder what Jim Rogers made…

 

Tijs Limburg