Fannie and Freddie race to Zero, Bill Miller should just Kill Himself.

With Barron's coming out this weekend and concluding that Both government sponsored darlings FRE and FNM have a negative equity valuation of around -$50 Billion a piece, it seems these stocks are racing rapidly towards zero. With many people invested in the stocks, and much belief that they can recover stocks do not go to zero overnight. Kinda of like how everyone knows some day, they will die. This is a fact. Most of us can say within 100 years from our birth will be our death. But we can't determine exactly when, unless we have a specific illness. With Fannie and Freddie the death of the equity is rapidly approaching. Within a month or two these stocks will both be trading under a dollar.

I think its funny that Fund Managers like Bill "I could not pick a crappier portfolio if I tried" Miller's Legg Mason Value Fund just keep holding the bag and buying more of these losers on the way down. He now owns 12% of the worthless equity in Freddie Mac. Someone should tell this guy about technical analysis. Did this guy forget that companies are comprised of equity and debt holdings? Did he bother to look at the Balance sheets? Shares of FNM and FRE are down 95% and 96%, did someone ever tell Miller to cut losses after say losing a certain portion of capital? I think not. When a manager thinks he is right and the market is wrong, this is very dangerous.

Fannie Mae CEO Daniel Mudd proclaimed Fannie Mae has more capital than it has ever had in its history. Yeah, more capital and more liabilities. So if you lent me a million dollars yesterday, and I was losing 200 thousand a day, I could also make the claim that I "had more capital than ever in my history". But at this rate it would only last about 5 days. Kids this is why you can't always trust the fundamentals, and why you never try to "catch a falling Knife". Let someone else like Mr. Miller put the floor on stocks, its far too expensive and frustrating for me. By the way, I hope Bill Miller does himself and his "investors" a favor and leaps head first off a tall building. But If he actually did it I would be surprised, because he would actually be cutting his losses.

No matter how successful I will ever become in this businesses, I pray that I can stay humble, objective and continue to respect the universal truth that "The Market is Always Right". No matter what my personal opinion is, or what I want or think the market should do, staying objective is the most important Investment and Trading virtue. Amen. Happy Trading.