Just days after> receiving an $85 billion loan guarantee from the government, AIG (AIG)
Remember CMGI Field to offering in-office massage (another dot-com-era mainstay), it's the responsibility of management to decide how best to allocate capital. As a shareholder, if you don t like their policies, you are free to dump the stock at any time.
Unfortunately, because government took the fascist step of nationalizing a private business instead of letting it fail, we don t have the luxury of divorcing ourselves from AIG s poor business decisions. How their business is run, how they pay their employees, how risk is taken and hedged now have a direct effect on your bottom line even if you never bought AIG s stock and have wanted nothing to do with the company at all.
The practical difficulty with public ownership is that we now all get a say in how AIG s business is run, meaning that business decisions are now made by politicians with no industry expertise and zero skin in the game for political purposes. I ve sold the stocks of companies with bad management dozens of times, but I can t sell my position in AIG. You'll note that the federal government now says it ll lend the company an additional $37 billion given its continued capital constraints.
Outraged over $23,000 in spa bills? So am I. But your outrage shouldn t be directed at the fat cats at AIG, but at the government whose interventionist policies invested our hard-earned tax dollars into the company in the first place.
Long Distance to the Far East
Last week I mentioned having added to my position in NTT DoCoMo (DCM),
I m the first to admit that my interest in Japanese stocks has been expensive, given the reality they ve been hit hard along with equities across the globe. But DoCoMo s relative strength, even amid Tuesday s 9% drop in the Nikkei 225, is hard to ignore. I continue to hold the stock.
Those equally as impressed as I might consider a less volatile but highly correlated alternative in shares of DoCoMo s parent company, the massive Nippon Telegraph & Telephone (NTT),
NTT, DCM vs. S&P 500 Index
1-year performance; data as of Oct. 9, 2008