First Insurance Suggestion – AIG

I hope everyone is happily stuffed from Thanksgiving so you’ll be to subdued to argue with me over today’s suggestion.

I like AIG for a short term speculative play.  The Fed’s paid approximately $8 per share for their ownership in American International Group.  While I do know the Federal Government has no problem over paying for things they certainly don’t want to spend money on the bailout just to watch AIG go bankrupt anyways.  I’m not smart enough to determine if the credit derivative swaps are going to bring AIG down one way or another, or if it’d be better for the economy to just let AIG fall or not, but I do know the Democrats will not want the economy to unravel further on their watch.

Obviously, both AIG and the Feds had a good understanding of the true worth of AIG, it’s not the first insurance company they’ve owned, if it was to survive.  So even if the government was willing to pay a 100% premium from their believed value – that places AIG at $4 per share or a 100% increase from today’s $2 per share.

I don’t believe any type of dividend is safe, nor do I believe the analyst expectations of AIG being profitable of next year, but I wouldn’t intend on holding AIG for a year, I just trust they won’t let it be the big first insurance failure that triggers more questions on the stability of American investments.

Here’s the 3 month chart of American International Group:

You can see the price has crossed the 50 day SMA with lots of room above to the 200 day.  Also the RSI has just crossed the 50 and the MACD is nearly positive.  These are all positive signs for a momentum play with a strong price base built for share price resistance.  I feel this is a relatively low risk play.  If the MACD flips positive Monday morning I’d put a buy in with a stop loss around $1.75.

First Insurance Probably Financials Next… I’m out of control.  I hope it’s just the turkey talking.

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2 Responses to “First Insurance Suggestion – AIG”

  1. [...] Spohnholtz presents First Insurance Suggestion – AIG posted at Learn The Stock Market And How to Trade, saying, I like AIG for a short term speculative [...]

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