Thursday, June 17, 2010

A Conversation

CoID walks over to FLG. (To read a previous conversation with CoID, please click here.)

CoID: Did you hear that Fannie and Freddie delisted from the NYSE?

FLG: No, I hadn't.

CoID: I have shares. What do you think that means?

FLG: Well, it ain't good.

CoID: Will I not be able to sell them?

FLG: You'll be able to sell them OTC.

CoID: OTC?

FLG: Over-the-counter. Basically, computer system trading. Like NASDAQ. The bigger question is what they'll be worth in the future.

CoID: Would you sell?

FLG: I'm biased because I wouldn't have bought them in the first place.

CoID: Do you think I'll lose all my money?

FLG: I hear they're going to need more bailouts. My guess is that private investors are going to get hosed. They'll just be outright nationalized.

CoID: That's not fair.

FLG: Yeah, it is. If it weren't for the bailouts you'd have lost your all your money already. But again, I'm biased. What was your story about how Fannie and Freddie would make you a profit?

CoID: I thought the government would take their bad loans and put them in a bad bank. Then the companies would be in good shape.

FLG: I see. So, just to get this straight, you thought it would be a good idea to invest in a company that needed a government bailout for you to make money?

CoID: I wouldn't put it that way, but yes.

FLG: Good investment strategy. A famous American named P.T. Barnum had a saying...

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