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For those of you who really believed that AIG was worth $55, more power to you. I couldn't resist putting a strangle on it at about $55 or so, even-though I never delved in depth. $10 lower and 2 trading days later... The company received $183 billion of assistance, then boasted that it turned a profit of a few million dollars due to accounting machinations. It is on the hook for practically everything that is wrong with the credit system now. Does anybody really think that there is any equity value left in this company? The US government doesn't, the sell side analyst don't. This may actually be a contrarian trading opportunity because I can't remember the last time I agreed with both the sell side and the government :-)

It is about $45 in pre-market trading now, and anecdotally, I believe that is about $40 too much, but that is just an uneducated hunch. I don't want anyone to get the impression that I am offering advice or suggesting that they take action. What I am doing is trying to illustrate the folly of what happens when momentum trading goes to the extreme. Obviously worthless companies are bid up 500% (that's right, AIG went from $10 to over $50). Look at this chart, and tell me if the right side of this trade was short or long over the last year. 


I have a few banks that I feel may be as worthless or even more worthless than AIG, and are trading at $5, $15, and $40 plus. I will preview the $15 candidate for subscribers in the nest 48 hours and will extend my failing banks list for the non-paying readers.