AIG.... WTF?

[alnorth]

This is sort of similar to people wondering why Vegas "likes" one team over another team. Vegas doesnt care, they are predicting what the bettors will do, regardless of if they are right.

Stock traders are not reacting on emotion when they buy or sell, they are reacting based on the company's future health, growth, and ability to pay dividends. Sometimes emotion will color their perception of that, but those 3 things are what they are evaluating, nothing else. Yesterday, the odds were that AIG would go bust or be mostly taken over by the feds and the shareholders would be wiped out, so the stock was trading for pennies.

Now, with some encouraging news that the economy sucks but maybe not as bad as feared, perhaps we'll have fewer defaults, AIG will have fewer future losses on their derivatives, and perhaps has a slightly better chance to make it without having to wipe out the shareholders.

The fact that the CEO is answering embarassing questions over a puny $165M is irrelevant. Highly newsworthy, but irrelevant to the stock price.