What Meme Investors Can Learn From the Fannie-Freddie Collapse

The smart money thinks it’s only a matter of time — weeks, maybe days — before the meme-stock craze finally evaporates. But if history is any guide, this mania hasn’t quite run its course.

For proof, look no further than the strange, decade-plus-long investment mania over shares of the bailed-out mortgage giants, Fannie Mae and Freddie Mac.

That F&F mania came to an abrupt end Wednesday (for reasons I will describe in a bit), but not before suckering hordes of small investors to mortgage their retirement savings on what are now penny stocks.

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It should serve as a lesson to the meme-stock fanatics, though my bet is that it won’t.

Fannie & Freddie would appear to be weird companies for a stock mania to take hold, but then again, so is AMC Theatres, the money-losing, debt-laden movie chain that for some reason has become a darling of the meme-investor movement on Reddit.



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