FNM and FRE make me nervous.They're quasi-government agencies, which is good in that it makes them low-cost producers, but (very) bad in terms of management accountability - decisions are politically rather than profit motivated. FNM and FRE have both suffered from accounting snafus for how many years now?Also, both of these companies are super, super leveraged.Buffett unloaded his FRE in 2000 after holding it for 12 years or so - do you think he's going to buy back in?I suppose Buffett bought in because the company i) had high returns on equity, ii) was growing earnings, and ii) was cheap (!). It's hard to tell whether companies that are aggressively writing down assets are cheap. They're potential value traps. I guess that's why making money is hard work.
don't disagree with anything you wrote - i guess the tone and content of my post was with the grudging acceptance that entities like fnm and fre will always be with us in the real world. although, in a perfect world, i'd like to see less govt intervention and more marketplace. but, my own feeling is, now that the flawed system we have is so entrenched, better to work within the confines of it rather than try to undo it, change it and suffer that much more. i think fnm and fre are really big bargains; it would'nt surprise me at all if buffett buys alot of fre under 30; and i think congress - whether demo or rep - will keep a closer eye on fnm and fre managements - at least for awhile.
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