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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: AurumRabosa who wrote (69155)	10/16/1999 11:22:00 AM
From: Knighty Tin	Respond to of 132070

Ron, Freddie, even more than Fannie, which I also hate, is a highly leveraged house of cards. As you said, they borrow short to lend long and they have huge debt service requirements on a small capital base. Here are the factors that can hurt the stock: 1. Rising interest rates. That is the main reason I am so far ahead on this dog so far. 2. Legislative action. Every investor in the world knows that what Freddie does is idiotic, but they also know that the Congress will bail them out if things get too tough. So, any time Congress starts acting like it wants a pound of flesh, out of profit margins, lending to the poor, or a more even playing field for the private competition, Freddie is vulnerable. 3. Lower money supply. Like a shark, Freddie has to grow or die. 4. Lower credit creation. If the Fed puts restraints on lending institutions, Freddie has to pay up for the smaller pool of mortgage packages. 5. An inverted yield curve. 6. Investors waking up.