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AIG on the Path to Nowhere


It's had way too much government involvement.

Well, I'm back from a much-needed week of vacationing. I ended up taking the kids to the Great Wolf Lodge and to a museum in Philadelphia. I also had what I guess you could call a star sighting: We saw Ryan Seacrest of American Idol fame. Let's just say my wife was more than a little excited.

Asian stocks rose overnight. The Hang Seng and the Nikkei were up 1.73% and 0.2%, respectively. European stocks were in positive territory early this morning, too. And here in the US, we're currently trading higher.

Here's what I'm focused on this fine Monday morning:

American International Group (AIG):
The company that's world renowned for its insurance business (and unfortunately, for the help it's received from Uncle Sam), released its third quarter on Friday.

After seeing the release, I'm left like a deer in headlights.

There's a part of me that continues to think that because the government has been elbow-deep in this company, it's ultimately not going anywhere. On the other hand, because the government has been elbow-deep, it's ultimately not going anywhere. (That's not a mistake. Think about it for a minute.)

2. While part of me hates the fact that I've missed this party and would love to take advantage of the recent pullback, the rational side of me still wants to see several more quarters of performance before trying to game what the next several years may look like.

3. Because of my clear lack of conviction, I'll gladly continue sitting this one out on the sidelines.

General Electric
Fellow Minyan Justin Sharon pointed out in his article on Friday, Upgrades & Downgrades: General Electric Gets a Jolt, that Sanford Bernstein and Oppenheimer bumped up their ratings.

1. Although the shares have bounced like a ball off their lows, they still have a long way to go, and people don't realize the full potential of the company or the stock.

2. I think that the shares go to at least the high teens within the next year, and that the mid-$20s is doable within two years' time.

3. The 2010 estimate seems light, and it's eventually going to get bumped up.

4. In an ideal world, waiting for a pullback would be nice, but I think the stock is a good deal right where it's trading. And although I may be getting a few chuckles right now, in a couple of years, I think I'll be proven spot-on.
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No positions in stocks mentioned.

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