Who is Keefe Bruyette and Woods, and does anyone care? (Which way were they in the great bear market?)  Well obviously someone cares because they sent FNM and FRE down about 17% on a gap with a report saying the shares were worthless.  We have sent an email to enforcement@sec.gov  (and you should too) asking them to investigate to see if KBW have a conflict of interest, or if they informed their bosom clients they were going to ambush these issues.

At the least the two are highly speculative, but the speculation is that the government will take away the life ring and let them drown.  Do you think that is going to happen?

We’re sitting on fat profits because we made this economic judgment back when they were about to drown like kittens in the bathtub and we bought enough to amuse ourselves.

Ironically even after a 17% drop (as you can see) the Basing Point stop has not been taken out, and in fact this downwave (up to today’s action is not complete.  The low of September is the Basing Point.  We’re half tempted to add on to our position and wouldn’t blame anyone who did, using the September Basing Point stop as the bailout point.  High risk (but known and measurable), high reward.

This trade is for hombres.  And chicas who don’t mind matching wits with hombres.

Send that email to the sec.

(Did we point out earlier that there is a nice flag on this chart?)