August 8, 2008
AIG Shareholders in AIGony
AIG Plummets as Insurer Won’t Rule Out Capital Raise
“AIG slid as much as 17 percent in New York Stock Exchange composite trading, its biggest one-day drop since at least November 1982. The stock declined $4.44 to $24.65 at 10:09 a.m., leaving the shares down 57 percent this year. AIG’s quarterly loss was driven by $5.56 billion in pretax losses tied to credit-default swaps.
Credit-default swap contracts, which are guarantees AIG sold to protect fixed-income investors, drove the company to record losses in the two previous periods, accounting for about $25 billion in writedowns over nine months.”
Argh. AIG was another “deeply undervalued” stock I bought based on its sterling history of dividend growth — a long stretch of glory which is destroyed now. The chart didn’t look awful until $50 failed … once it did, I should have bailed (but didn’t since I had my long-term investor hat on, which I now refer to as my dunce’s cap).
August 8th, 2008 at 3:45 pm
Hi Chairman,
I also share your pain in AIG. I thought that insurance companies were different than banks because they have underwriting profits in addition to investment income and thus would be better positioned to whether this cycle. WRONG. lol
Do you see the bigger challenges at AIG as their investment portfolio writedowns, or their loss exposures on the mortgage insurance and CDO insurance.
Still long.
August 8th, 2008 at 5:50 pm
Hi,
thank you for describing your experience with “long term” investing. Now I m assured( from yours and others people findings) that long term investing should be infact, market timing based solely on monthly chart. Stops included.
Im enyojing reading your posts, good luck.
August 9th, 2008 at 7:59 am
The last time I flipped on my long term hat, I went long India just in time to lose %25 over four weeks until the pain overloaded my keyboard finger and I now pi$$ on the hat out behind my barn every day! IFN anyone?
August 9th, 2008 at 8:34 am
@Hudson: Not all my long-term ideas have been so bad… I bought MO and MCD in the teens many years ago based on the same “deeply undervalued” history-of-dividends analysis… the difference is those guys actually make stuff as opposed to shuffling around pieces of paper.