25 November 2008: The Fed launches what became QE1
The Federal Reserve announced it would buy up to $500 billion of mortgage-backed securities and $100 billion of debt from Fannie Mae, Freddie Mac and other housing agencies. Mortgage rates fell quickly. It was the start of what became known as quantitative easing. Critics worried about the Fed printing money; supporters argued it was needed to stop the housing collapse from deepening.
The lesson: When a central bank becomes the biggest buyer, prices follow the buyer, not the fundamentals.
What it meant for investors
$1,000 in Fannie Mae at the start of 2008 → $200 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. That is a loss of $800, while a plain index fund over the same years made $3,626.
What Fannie Mae teaches: When a business's fate depends on a government decision rather than its own operations, the stock becomes a political wager, not an investment in earnings.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2008 | $40.00 | $200 | $4,626 |
| 2010 | $1.00 | $8,000 | $6,071 |
| 2012 | $0.25 | $32,000 | $5,312 |
green = beat the S&P 500 · red = lost money
What if you bought Fannie Mae? Every starting year and the full story →
More Fannie Mae history
- 13 July 2008: Paulson asks for powers to rescue Fannie and Freddie
- 7 September 2008: Fannie Mae and Freddie Mac taken over
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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