Board-Ansicht
Mix-Ansicht- Was steckt hinter der FED Panik? - black elk, 05.01.2001, 02:04
- Re: Was steckt hinter der FED Panik? - Jochen, 05.01.2001, 07:53
- artikel zu fannie - puppetmaster, 05.01.2001, 11:05
artikel zu fannie
Spanking Fannie
By James J. Cramer
1/4/01 2:12 PM ET
As part of my new role as strategist here at TheStreet.com, I want to
spend some time explaining anomalies that puzzle readers, to make
you better investors. I have that luxury now midday because I am not
whipping around the Intels and the Ciscos.
Many of you seem confused about why Fannie Mae (FNM:NYSE
- news - boards) would go down yesterday and today even though
the Fed is easing. Fannie Mae, after all, is a financial. Heck, it has a giant mortgage portfolio, that's a
financial writ large! After all, the other financials were flying, even the crummy ones -- especially the
crummy ones!! -- why not Fannie?
I think this is a great question because it cuts to all sorts of issues about how to make money off the
Fed's change, which, of course, is our goal. First, what makes Fannie so special? I think it is because
its paper (bonds, notes) is backed by the full faith and credit of the U.S. government. Also, I think it is
viewed as an extremely well-run company, maybe one of the best in the whole universe. It is a machine
-- a lean, mean, money machine.
In other words, when things go bad in the economy, Fannie Mae will still do well. Always has.
Always will. But how about when things go swimmingly in the economy? How about when people are
bailed out by the Fed? How about when the Fed states, implicitly, that it won't let the economy slip into
a recession? Fewer investors need Fannie Mae in that situation. In fact, I would go a step further and
say,"I don't want the best run financial when the Fed starts bailing, in fact, I want the worst one. I
want a Conseco (CNC:NYSE - news - boards) or maybe some bank that has credit problems, a First
Union (FTU:NYSE - news - boards) or a Bank One (ONE:NYSE - news - boards). These have
more leverage to lower rates than Fannie Mae.
It's always like that. In 1991, when the Fed was easing left and right, it bailed out all of the
ne'er-do-well banks. The savings and loans with the worst portfolios had the best runs off the 1998
easings. The ones with the best portfolios -- Fannie Mae! -- did the worst. That's happening again.
A similar process is happening right now at American International Group (AIG:NYSE - news -
boards). This excellent stock has done quite well in bad times and had a huge ramp when it seemed like
the Fed could gave a darn about the economy and was determined to quash the speculators. AIG is
another extremely well-run company that doesn't need the Fed's help. In fact, because it is an insurer
and was insuring things in a deflationary environment, it actually stands to lose from an inflationary
rate cut. It is insuring things at $1 that won't go up in value. Now they might, if only because we are in
a per se more inflationary world.
Conseco, of course, keeps ramping. Conseco is the insurers' version of Buzz and Batch. It is now
run by a serious guy, but the previous regime could have been right out of the Sunbelt Savings era
(that is, the savings & loan crisis at the end of 1989). Total jokers. Look at that stock run.
One of the hazards of a Fed cut is that there is no justice. The discipline in the system tends to peter out.
But we have to accept that hazard when you think about how many of the jokers have already been
swept away. It's the price we all have to pay, so you might as well make some money off of it.
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