Fannie Mae (NYSE:FNM) shares limped into August with a $0.58 share price. You would have needed to sell two shares just to order something off McDonald's dollar menu. The shares closed Tuesday at $1.86, for a massive 221% jump in less than a month.
As eye-popping as Fannie's gains are, what's even more interesting is the massive volume that blogger Karl Denninger first pointed out. As of this writing, trading in Fannie Mae, Citigroup (NYSE:C), Bank of America (NYSE:BAC), and Freddie Mac (NYSE:FRE) -- four of the most troubled and government-subsidized institutions out there -- made up 33% of the volume on NYSE Euronext's (NYSE:NYX) NYSE exchange.
Let me put that another way: One out of every three shares traded on the NYSE was Fannie, Freddie, Citi, or B of A.
So what gives? Have these institutions that are subsisting on government cheese suddenly turned the corner? To me, it looks like frenzy -- like coyotes descending on a carcass to try and get any remaining morsels. I've hung onto my shares of B of A, but I'm being careful to watch this spasmodic trading from a safe distance.
But what do you think? Is there good reason to join the rabid buying of these stocks, or will the crazed investors end up getting bitten for their enthusiastic buying? Scroll down to the comments section and share your thoughts.
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