Yes, I'm one of the fools that bought AIG, thinking it would go back up again. I have a mediocre position that averages around $7. I'm looking for intelligent insight - not to use to make a decision - but to compliment some views I've gotten from others in the past. Since all my equity trades are cash, it's not an issue of drawdown. I could hold it until the end of days, and it would be almost no worse than it is now. At $1.70 or so, I've little incentive not to hold it. Does anyone here think it could be a viable company in, say 4 years or more? Or do you honestly believe it's a done animal? Thanks for your thoughts.
at this point even the bondholders should be worried about their principal, nevermind the equity holders.
IMHO (I own AIG at 2.5), I don't see more downside, so your losses have already been taken. The Feds own the majority of AIG at present, and there are efforts to sell off assets and hopefully get the gov't out of the picture. Those plans are being delayed by the overall economic picture. My bet is that sometime in the future...no way to know when...this will happen. What AIG looks like at that point is anyone's guess, but my bet is that it will command a higher price than at present. But you probably knew all that.
if you guys sold your shares you would be amazed how clear your head would all the sudden be. penny stocks gets to peoples head when they imagine 10 bagger returns, one could make an argument that they as a whole tend to be overvalued due the 'lottery effect'(like tech stocks)
lindq - thanks - this was my line of thinking as well. Daal - what does selling my shares now accomplish? It's a CASH trade, not margin. As lindq said, I've taken the loss already. My mind is clear.
Holding onto an AIG shares would be a major misallocation of capital. Everything happens for a reason, there is a definite reason the market values AIG shares at a buck and change. Do you honestly want to hold onto shares of a company that needs to buy fed issued commercial paper just to make interest payments on its giant government loan? Sell and do something actually productive with that money instead of holding onto worthless AIG shares. If one allocates capital optimally to the highest return, getting rich is easy. Don't misallocate a penny of capital.
Ok, maybe I'm not explaining clearly or understanding something. I bought at 7. It's at 1.70. Most of my capital is gone. It's a cash trade. At this point it might make sense to hold the $1.70 if one believes, say $5 is possible in a few years. It's an investment. Or rather, the question is whether it should be looked at as an investment.
I would sell it, take the loss off your taxes and invest the money into something that has a good chance of making your money back.