On my previous post, I'm wondering what is the chance of shareholders of common stocks of Fannie Mae and Freddie Mac would suffer permanent loss of capital. With tremendous amount of leverage, worsening economy, deteriorating housing market and diminishing liquidity in credit market, it takes huge courageous to go against the crowds, which Bill Miller, Richard Pzena and David Dreman have been doing.
It would be helpful to hear what Warren Buffett, the greatest investor of all time, has to say.
From CNBC Interview with Becky Quick, Buffett said Freddie and Fannie would have been gone a long time ago if the government hadn't been behind them. He thinks Freddie and Fannie will survive but shareholders could "lose a lot of money".
When asked is Fannie Mae going under? Buffett says in a sense they already have because they wouldn't survive without government backing. "They priced risk wrong."
Take home messages from Warren Buffett...
Rule No 1: Never Lose Money
Rule No 2: Never Forget Rule No 1
It would be helpful to hear what Warren Buffett, the greatest investor of all time, has to say.
From CNBC Interview with Becky Quick, Buffett said Freddie and Fannie would have been gone a long time ago if the government hadn't been behind them. He thinks Freddie and Fannie will survive but shareholders could "lose a lot of money".
When asked is Fannie Mae going under? Buffett says in a sense they already have because they wouldn't survive without government backing. "They priced risk wrong."
Take home messages from Warren Buffett...
Rule No 1: Never Lose Money
Rule No 2: Never Forget Rule No 1
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