Friday, August 07, 2009

AIG Manic Depressive

AIG (AIG) Let’s put this one in perspective. They post some black ink and everyone goes gaga. If they made $1.8 billion this past quarter and they owes the Feds $180 billion it will take them 100 quarters or 25 years to earn their way out. The assets they sell will have to knock debt down faster than earnings.

Usually the stock exchanges require management to speak to sudden sharp changes in the price of shares. But the major shareholder is the Fed and who is going to tell Uncle Sam who is also the major creditor and the regulator that their actions are suspect.

If you buy a stock it’s because you believe in the going concern valuation. !00% return of earnings for 25 years is not a going concern. The stock is manic depressive. Disclosure is not transparent.