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In Fannie-Freddie Ruling, Mutual Funds Hit With 'Right Hook'
FYI: The collapse last week of securities tied to Fannie Mae and Freddie Mac punished some of Wall Street’s best-known money managers, with star investor Bruce Berkowitz’s main mutual fund losing more than $600 million.
Seems to me the government could have "bought" all outstanding shares at a reasonable market price which would have partially compensated shareholders. This would have made the government the sole owner of preferred shares and allowed them to proceed with their plans of retention of profits.
Sure doesn't seem like the government is on the right path to attract private ownership of this industry.
@bee, I agree, the gov't could have done much better here. To just come along in 2012 and say, "all profits now go to the government", of course is going to infuriate shareholders. They should have worked out a win win situation. I don't know all the details here, but if I were a shareholder in Fannie or Freddie, common stock or preferred, prior to the gov't claiming all profits, I would not be happy......
Of course anyone who bought after that fact is in a different position.
I think Berkowitz, Ackman and the others with lawsuits have a strong point. As far as I know, Freddie and Fannie are supposed to "cease to exist" at some point in the future. But what will replace them? BB has pointed out how essential these companies are for Americans getting mortgages.
Sorry folks, but the government has this in the bag. Simply no way out. They tried, they lost. Best just get on with it. Cant win 'em all.
I would rather, berkowitz focus on his next 10 bagger. In fact, if he incessantly focuses on this loss is when i would consider selling fairx. Buy the manager they say, and ni-ot the fund. Well, a distracted manager we dont want. Fannie should not replace Fartiromo.
Sorry folks, but the government has this in the bag. Simply no way out. They tried, they lost. Best just get on with it. Cant win 'em all.
I would rather, berkowitz focus on his next 10 bagger. In fact, if he incessantly focuses on this loss is when i would consider selling fairx. Buy the manager they say, and ni-ot the fund. Well, a distracted manager we dont want.
Quote from B. Ritholtz piece linked by Ted here. Everyone is wrong in this field (investing), and quite frequently. I find it helpful to think of investing and trading as more akin to being a hitter in Major League Baseball than being the captain of an oil tanker. You can bat .300 and be thought of as a strong player. Hit .350 and you are an all-star; break .400 and you are one of the all-time greats.
In finance, your job isn't to bat 1.000, but rather to manage those times when you don’t get a hit. How you handle those incidents when you are wrong will have enormous impact not only on your on-base average, but on your win-loss record. Understanding your own errors and acknowledging them is an extremely important part of this process. It is why I do my mea culpas in public every year.
There is a fine art to being wrong, one that all investors should master. As we have written before, however, those who are never wrong find disaster in the markets. Avoid these people and their money-losing philosophy at all costs.
Comments
Sure doesn't seem like the government is on the right path to attract private ownership of this industry.
Of course anyone who bought after that fact is in a different position.
I think Berkowitz, Ackman and the others with lawsuits have a strong point.
As far as I know, Freddie and Fannie are supposed to "cease to exist" at some point in the future. But what will replace them? BB has pointed out how essential these companies are for Americans getting mortgages.
I would rather, berkowitz focus on his next 10 bagger. In fact, if he incessantly focuses on this loss is when i would consider selling fairx. Buy the manager they say, and ni-ot the fund. Well, a distracted manager we dont want. Fannie should not replace Fartiromo.
Everyone is wrong in this field (investing), and quite frequently. I find it helpful to think of investing and trading as more akin to being a hitter in Major League Baseball than being the captain of an oil tanker. You can bat .300 and be thought of as a strong player. Hit .350 and you are an all-star; break .400 and you are one of the all-time greats.
In finance, your job isn't to bat 1.000, but rather to manage those times when you don’t get a hit. How you handle those incidents when you are wrong will have enormous impact not only on your on-base average, but on your win-loss record. Understanding your own errors and acknowledging them is an extremely important part of this process. It is why I do my mea culpas in public every year.
There is a fine art to being wrong, one that all investors should master. As we have written before, however, those who are never wrong find disaster in the markets. Avoid these people and their money-losing philosophy at all costs.