Freddie Mac FRE stock collapsed 30% in one day this past week. This is the second largest mortgage company in America. FNM and FRE are both seeing their credit ratings drop. If there is anything I have learned over the years it is simply that Fitch S & P and Moody’s are like the Three Stoges Fire Dept, they get there just in time to watch the last embers burn to the ground. They are nearly always late to sound the alarm. This is another reason the stock market melted before T Day. Such holidays are traidtionally up for the stock market.
Understanding accounting and what lies behind the strength of a balance sheet helps us understand such news. I have been preaching about the sub prime mess for months, Jim Rogers was sort FNM two years ago, I could not figure out whyit was not dropping then, he was finally proved right. Now the DMN reports that FRE may have to sell stock to raise capital, but who will be buying?Go to finance.google or finance.yahoo and check out the charts on FRE and FNM and CFC, where is the bottom for these stocks?
Professor Elam 
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