AIG? good bad?

[reptile411]

Whats everyone ells think. I pondered it for about a week and ended up with 630 shares. I figured the Gov said they cant let them fail so that sounds pretty safe to me but im not sure.

[Broken Arrow]

HMM! This IS an interesting question. The more I think about it, the more I wonder if common shareholders truly will be wiped out on something that is deemed "too big to fail"? Sure, they've said that common shareholders will bear the brunt of the damage, but most of that damage has already been done, as most people before this have lost most of their capital....

But what about now? Can it truly go to $0.00? And if not, how low will it go given its currents state?

AIG is currently floating around $0.35 per share.
FRE (Freddie Mac) is currently at around $0.37 per share.
FNM (Fannie Mae) is the same at $0.37 per share.

I wonder....

[reptile411]

I am fairly confident it will hit bottom soon if not already. At least for my sake I hope so. I have lost about $80 in 24 hours just in the 0.10 price dip. Its horable that so many lost so much but good I guess that average people like myself can now afford to buy thousands of shares at a time in hope for hitting that ultimate dream of being wealthy some day. if it gets back to its 52 week high that will turn my $280 into $31,000 I will have a drink to that.

[Broken Arrow]

I am glad that you are confident, but I'm less optimistic. It's always possible that it will go lower, especially when you consider the downside risk of not knowing how much more capital it will take to stabilize the company....

And I'm sorry to be the one bearing the bad news (I don't know why this always happens), but if these companies are being "embalmed" with bailout money, but are not generating capital, it is extraordinarily unlikely that it will ever hit the 52-week high (a kind of technical that I never really understood why people get so hung up on). In fact, I think Treasury secretary Paulson(?) has already come out and said that common shareholders will bear the brunt of the damage.

Fortunately, I don't think you're betting with money you can't afford to lose, so for a small bet, I can't see the harm. That and you've already made the bet. Besides, a 30%, 20%, or even 10% gain is pretty darn good.

While I don't think there is anything wrong with it, I can't gamble like that though. Too speculative for my blood.

[reptile411]

Yes, I never ever bet with money I cant afford to loose. Thats how this whole recession started in my opinion. If they were delisted tomorow I would still live on. BTW delistings are suspended untill 6-20 so I have that going for me. Im sure it will go lower but not much. I would be amazed if it went below say .25 but I guess anything is possible.

[maat55]

I don't see the difference between AIG and Madoff. Why should one be saved over the other. It is people loosing money. Government can't fix everything, and shouldn't.

[Broken Arrow]

Fair enough. But if I may make a suggestion, I recommend to bail at the first sight of profit or danger. In fact, I hope you have a protective stop of some kind already in place.

Even if not a lot of money is on the line, I believe in making every trade the best possible, because what typically works for a small trade will work for a much larger trade too. So, I think learning to trade well is the key, not necessarily how many dollars you end up with at the end of the day.

[reptile411]

I agree. I was 100% the AIG bailout. they did it to themselves and they knew darn well what they were doing. I think they should be prosecuted and the company should fail just the same way I would if I did the same thing, however. I got to think if they have the backing of the gov with an %80 stake, maybe its a good bet to pick up a few shares and see what happens. However just because I am invested in them dose not make me any less disgusted with whats going on.

[reptile411]

Typically when under a buck or even .50 for that matter I make myself sell if it hits .35 for more than a couple days. AIG on the other hand I have to lower the bar as they are already below .35, I am not sure of how low yet but maybe .20 or .25, .23 would be a 50% loss for me at that point not including the $20 broker fee for the purchase and the sale.

Fair enough. But if I may make a suggestion, I recommend to bail at the first sight of profit or danger. In fact, I hope you have a protective stop of some kind already in place.

Even if not a lot of money is on the line, I believe in making every trade the best possible, because what typically works for a small trade will work for a much larger trade too. So, I think learning to trade well is the key, not necessarily how many dollars you end up with at the end of the day.

[disneysteve]

I think this is akin to buying a lottery ticket with the added cost of the commission.

AIG is at $.33 so your 630 shares are worth $207.90. You paid $280, or $.44/share, so you're already off 25%. At that is not counting the commission. You need to get up to about $.48 just to break even. That certainly could happen, but it could also drop another 25%. There is no way to know.

As long as you understand that what you are doing is gambling and not investing, I've got no problem with that. Heck, I bought BAC recently at $5/share and it is now $3.04, so I'm right there with you.

[reptile411]

I know the feeling. I purchased BDCO at about .75 per share now its at .34 on the other end of the talbe I purchased LMT at the start of the war on terror. they were fairly flat at around 40 if I remember correctly. I got tired of waiting and sold it all to free up funds for Google but guess what? they eventually went to over 100 per share. stupid me. Now of course I am reinvested with them at 58 per share. Its all a game. no question about that. its no different than pumping a buck in a slot machine and cheering it on.

[GREENBACK]

I wonder about these companies that took bailout money like that(they had no choice). The pres. has limited what CEO's will be allowed to make. What kind of leadership will they have at the top when their top management leaves and they need to replace him with someone who is limited to a far smaller salary than their talents merit. How will that affect their future profits?

[humandraydel]

The shares you bought are worthless. Right now the government is frantically trying to unwind all of AIG in an orderly manner. The government is selling anything of value (including ILFC) to pay back bond holders (including the U.S. for bailout money). Do you really think there will be ANYTHING left for the equity holders after all the creditors are paid back?

[Snodog]

I think this is akin to buying a lottery ticket with the added cost of the commission.

I agree. This is not something to do with your retirement money. Maybe if you have a little extra money you can play around with this.

[leonoratisdale]

AIG has always been a competitive insurance company. They will not be dropping their rates.Reason being is they have BILLIONS of dollars to pay back towards the government.