Freddie Mac Is in Free Fall

The stock price of Freddie Mac (FRE), a government-sponsored mortgage finance company, has declined 40 percent in just over one month in anticipation of many more mortgage defaults and deteriorating earnings. How much further can this stock drop? No one knows for certain, but its downside is not over and FRE could drop a lot more before it stabilizes.

Fannie Mae (FNM), another mortgage finance company, has a very similar looking chart.

Avoid both stocks for now.

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Posted November 20, 2007.