.68 Cents A Share!

Fannie Mae is now trading around .68 cents per share. In 2001, it reached its peak at a high around $84.00 per share!

Check out Google Finance for the most recent share price of Fannie Mae.

Now for all of you hungry investors that are like... " Honeeeeey... we got to buy some Fannie Mae shares now!" Hold on just a minute my friend.

First a little background.

Fannie Mae and Freddie Mac were both created as Government Sponsored Enterprises with one main goal; to make home ownership more attainable. They were able to do this by purchasing mortgages in the secondary market (where the buying and selling of mortgages occur), grouping them together (I'm assuming based on loan characteristics such as loan type, default status, product types (adjustable rates, fixed rates, balloon mortgage, etc.) and other mortgage characteristics. Then these mortgages (purchased from the primary market; where loans originate) where sold to investors on the open market in the form of Mortgage Backed Securities (MBS).

This seemed to have worked well for a while. Millions of people were able to purchase a home because of Fannie Mae and Freddie Mac at affordable interest rates. Both Fannie and Freddie made the American Dream of home ownership a reality.

Where we are today.

But then something happened.

I still don't quite understand all that took place but it seems that if you combine; massive job losses, declining property values, an economy linked to the the dreaded words; inflation, deflation, stagnation, recession, and depression, sub-prime lending, predatory lending, rising mortgage default rates, a credit crisis, and a global economic meltdown; you've got big problems.

Millions of peoples could no longer afford to pay their mortgages, investments were losing tons of money throughout the world from these mortgage backed securities, big businesses... go out of business, and two giant Government Sponsored Entities are in need of a rescue plan.

In comes conservatorship.

Whew!

So, before we consider adding Fannie Mae shares (or shares of any business) to our stock pick list; I think its important to be as informed as possible. Especially with such a complex situation with so many possible outcomes. Let's diligently do our homework. Weigh out the possible outcomes against our investment objectives (to minimize losses) and try to know the answers to some very important questions; like (in this case):

1. What happens when the conservatorship ends?
2. Will Fannie Mae maintain its current operational structure and policies?
3. Will it continue to have competing priorities; to provide low interest rates to mortgagors, provide the highest earnings to shareholders, and achieve mortgage lending goals of regulatory agencies?
4. If the operational structure changes; what impact will that have on shareholders? On the stock price? On the housing market at home and abroad?
5. What impact will our new government administration's economic goals have on the housing industry in general and Fannie and Freddie more specifically?

What other questions come to mind?

So, in conclusion, at the current price it seems that to buy some Fannie Mae stock at this time may not be a bad idea; but, always remember to try to understand as much as you can about the total picture. Know the risks and try to minimize them.

It will be interesting to see how this all pans out. Let's try to stay on top of this one while we continue our journey.

Please keep me posted of any updates.

Happy New Year - May this New Year find you and all that are dear to you, happy and doing well!

Terrestrial Energy by William Tucker

I read a very interesting book review in the Wall Street Journal last week. The article was written by William P. Kucewicz and it was about a book entitled Terrestrial Energy by William Tucker. Of course this caught my attention for many reasons.

Subscribe now to The Wall Street Journal and Save 70% off the newsstand price!


First, the debate over alternative sources of energy has been raging for a very long time now and has reached a boiling point during our most recent presidential election process. Second, we recently added two energy-related stocks to our Stock Pick List; Constellation Energy Group, Inc. (CEG) and NRG Energy, Inc. (NRG). And third, Electricite de France just entered in a deal with Constellation to acquire a 49.99% interest in Constellation Energy. Electricite de France is the main company that generates and distributes electricity in France. It produces much of its energy through nuclear power.



The writer of this book review explains how the author of Terestrial Energy believes that nuclear power is the best option that is available to us now as a source of alternative energy. By reading this article I learned that nuclear power comes from the interior of the earth and comes mainly from two radioactive elements; Uranium and Thorium. The nuclear power that resides under the earth can reach temperatures hotter than the sun.

Whew that's hot!

And, when funneled through a reactor can be used to provide energy; like that which is currently used in France. The author also goes on to talk about the various other methods of alternative energy and the pros and cons of each.

For anyone who is looking to invest in energy in the future; you may find that this book provides some very helpful information about our current energy condition and the alternatives; wind, solar, and biofuels.

Here are some beautiful photos of France: http://www.enchanted-france.com/tourfrance.html

Be well.

Ingersoll-Rand Company Limited - New Stock Pick

Hey!

Thought I'd take a quick moment to let you know what I've been up to lately; as far as investing is concerned. As you know, the market has been and continues to be crazy. Trying to stay focused in this environment is not easy!

Nevertheless, this stock caught my attention recently; Ingersoll - Rand Company Limited - Ticker Symbol IR. Briefly, the company is a commercial products manufacturer with name brand recognition that includes, but is not limited to, the following brands:

1. TRANE
2. THERMO KING
3. STEELCRAFT
4. SCHLAGE
5. INGERSOLL RAND
6. HUSSMAN
7. CLUB CAR
8. AMERICAN STANDARD
   

This company is a commercial products manufacturer with manufacturing and assembly plants in the United States, Europe, Asia, Latin America, and Canada.

(Photo from: wikipedia)

I like to see global operations and exposure when looking at businesses to add to our list. If I remember correctly, this was one of our criteria for identifying a business to add to our Stock Pick List.

According to the company's web-site, they have four main areas of operation:

1. Air Conditioning and Services
2. Climate Control Technologies
3. Industrial Solutions
4. Security Technologies
   

The company provides comprehensive Air Conditioning and Services and solutions for residential and commercial properties, and businesses. Climate control is very important to businesses that store or transport highly perishable items. The company provides technologies for keeping items at just the right temperature while stationary or in transit. Both Themo King and Hussman are highly recognized brands in this field.

Ingersoll - Rand Company Limited also endeavours to make their customers more energy efficient while still being productive through their Industrial Solutions component. And finally, their Securities Technologies component produce products and services that make their customers more safe. They provide access control systems, locks and lock sets, steel doors and frames, and much more. Schlage is a recognized brand that falls under this component.

We have been hearing a lot lately about the economy, the lack of employment, and what the new administration wants to do to address these problems. The Obama-Biden Administration plans to create jobs by investing in areas like:

1. Advanced Manufacturing Strategies
2. Clean Energy
3. Clean Technology
4. National Transportation Infrastructure

It appears that Ingersoll - Rand Company Limited, and companies with similar operations may be positioned for growth as a result of our new administration's plans to boost our economy. I recently read that one priority is to replace old heating systems in federal buildings and to make them more energy efficient.

This sounds like a lot of work to me as I guess there are probably thousands of federal buildings throughout the United States. And many of which have heating and ventilation systems that are probably old and in need of a major overhaul.

You can read more in-depth about the plan to boost our economy here.

And if you like video, you can look here:

I am beginning to see how an initiative like this may result in more business for companies like Ingersoll-Rand Limited, any sub-contractors they may use, their suppliers, and other businesses that are directly or indirectly involved.

Can you think of any other businesses that may see a growth in revenue as a result of initiatives to create jobs?

Are these businesses that we should be researching to add to our list?

Ultimately more people will be put to work, which is what we need in times like these. Because, when people are working they can afford to spend more on the necessities like; housing, food, clothing, health care, saving for the future, etc.,. And as we know from this current economical environment; putting more people to work will help to boost our sagging economy.

Today, Ingersoll is selling around $15.00 per share. In October of 2007, it sold for around $55.00 per share. There current dividend is about 18 cents per share.

Who knows when, or even if, Ingersoll may begin to see an increase in earnings as a result of an increase demand for its services. My guess is that if our new administration is able to implement its plans to increase job opportunities; increases in earnings to Ingersoll and related companies won't be far behind.

Tell me what you think...

Learn more about the company from their web-site here.

See what's on Google Finance here.

Read a very interesting article on Trane's High Performance K-12 System Portfolio for K-12 Schools here.

As always, please remember that I am just a novice on an interesting journey. Please obtain the advice of an investment professional before making any investment decisions.

Be well.