Early Bird Special

Take a load off Fannie
Take a load for free
Take a load off Fannie
And you can put the load right on me
--The Band

The problems now surfacing in Fannie Mae (FNM), and her cousin Freddie Mac (FRE), were 'easy' to spot many years back. However, shorts who immediately acted on that perception may not have lasted to collect their reward when, years later, Fannie finally came unglued.

Count me among them. Short FNM since 2003, I was worn down by the market's ebb and flow while waiting for 'the big one'--that period when the collective market 'saw' Fannie's fundamental problems. Classically, I capitulated last summer--just before the financials blew.

There's little room for 'woulda, coulda, shoulda' in financial decision-making. Still, it's hard not to look at the 75% decline in Fannie over the past 12 months and marvel at the market's ability to dissolve an individual's commitment to an investment thesis at precisely the wrong time.

no positions