Wow! What a ride we had today. I was down over 2% in my portfolio. Not much positive that I can say except that the market typically overreacts in both directions. It may be that all of this action will shake out some folks and the market will continue to move up. It may be that yesterday's big upward movement on lower than average volume was a top and its downhill from here. I am sure that you could pay dearly for advice from "gurus" who will tell you that I am right in one or the other of my presumptions. Over the weekend I seriously considered selling all my positions and riding out the volatility for a time. After much thought I decided to hang in there. If the market keeps going down, there will be good times to add on to positions.
Focus Stock American International Group (AIG)
If you have seen my holdings on Covestor.com, you may well consider that I am too heavy in the financials. I own American International Group (AIG), JP Morgan Chase (JPM), and Citigroup (C). They were all down big today on heavy volume. I am hanging in there. I think that these financials are not as exposed to the subprime mess as they may be considered. AIG and C have very large footprints outside the US. I think AIG in particular is a great stock to own. It currently is trading at just over 10x projected earnings for 2007. AIG historically trades at around 22X earnings. 2007 earnings are projected at 6.70 per share. 2008 Earnings Per Share (EPS) is estimated at 7.30. Should the company go up to 18X earnings (still below its historical average), it could more than double to over $130 per share. Additionally the company has stated that under normal conditions it will increase its dividend payout 20% per year. Now that is only ,20 per quarter currently, but at an annual 20% increase the stock could have a payout of $2.00 per year, an increase of 150%.
I consider AIG to be a stock for the long run.
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