Fannie Mae's Stock-Market About Face

The OTC-traded common shares of Fannie Mae are up over 750% over the past 12 months but have plummeted during the past several days of trading. Is this a pure speculation play, or is there actually opportunity for Foolish investors?

In this video, Motley Fool financial analysts Matt Koppenheffer and David Hanson answer with a resounding "No!" Matt and David remind investors what these shares are entitled to and why investing in them may cause investors to lose sleep at night.

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Read/Post Comments (4) | Recommend This Article (6)

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  • Report this Comment On May 30, 2013, at 2:16 PM, dsandman999 wrote:

    FNMA was a penny stock and still is a penny stock. If it were any other penny stock the behavior would already be recognized for what it is - pump and dump. You can see it best by looking at the volumes right when the stock starts to dive. Looks like lots of folks and groups dived in only to loose to the folks doing the momentum trades. There is no reason for the stock not to go back to 0.83/shr or lower.

  • Report this Comment On May 30, 2013, at 2:22 PM, mikecart1 wrote:

    The past 5 days should be used as a model of every reason why to NOT invest in penny stocks. William Bernstein said it best: "a stock that goes up 900% quickly can fall 90% just as quickly". FNMA and FMCC are perfect examples. Doesn't matter what happens beyond this week. Thousands of people bought high and sold low and got absolutely owned.

  • Report this Comment On May 30, 2013, at 2:57 PM, nofearman wrote:

    Please tell me what part of stock trading is not speculative? Do you guys only buy stock that you know for sure what it will be?

    If so, you are just inside trader...

  • Report this Comment On May 30, 2013, at 10:07 PM, MadStabber wrote:

    You Fools do realize that nearly every mortgage document is FNMA created, talk about the 600 pond gorilla. Regardless of the government conservancy these shares will recover long term, particularly when the next quarters numbers come out and the stock gets relisted. So you've already missed the traders dream, at least follow your own advice and go long in an established industry leader.

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