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Why AIG Is Trading Up Today

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After trading down briefly this morning, American International Group (NYSE: AIG  ) stock is now up slightly in the first hour of trading, following the trend so far of the market's other big financials players and the market's three major indices.

It's all about the Benjamin
We know that markets around the world have been on edge for quite a while -- all awaiting word of how and when the Federal Reserve is going to begin dialing back quantitative easing. And everyone knows it's not a matter of if, but when, as chairman Ben Bernanke and company have come right out and said the Fed will begin tapering off its program of massive monthly bond purchases as the economy improves.

The world will get another chance to parse words and try to divine what the Fed is thinking this week, as its Open-Market Committee meets this Wednesday. The FOMC is the Fed's policy-setting body.

Foolish bottom line
After the minutes of May's FOMC meeting were released, markets were very volatile. Expect more of the same this time around. Unless, of course, Ben Bernanke would say something like, "We intend to never end quantitative easing, and are going to have it written into the constitution as a permanent fixture of the U.S. government's monetary policy."

Since that's not what's going to happen, expect more investor nervousness all around, which will affect AIG shareholders along with shareholders of most other companies. Companies have been switching between risk-on and risk-off modes rather frequently, and have been easily spooked. AIG itself has performed admirably as a company of late, coming back strongly in the first quarter of 2013 after a terrible fourth quarter in 2012.

I suppose what I'm saying is, AIG investors have no reason to be spooked in particular right now. Market jitters are what they are. The market is feeling a little more confident today, so far, after a rough ride last week. Maybe investors are thinking some clarity from the Fed -- even if it announces something disagreeable -- is better than no information as all. It's kind of like a doctor appointment for something you're very worried about: better to get it over with and find out the truth, than languish in a state of ignorance.

But always remember, fellow Fools, to take the long-term view of investing. Obsessive ticker checking can lead to more trades, which costs money and has been shown to degrade portfolio performance. Better to tune out market noise and tune into the fundamentals of the companies you're invested in. Your broker won't thank you, but your portfolio will. 

Looking for in-depth analysis on AIG?
AIG's stock has been a favorite among hedge fund managers. Have they identified the next big multi-bagger, or are the risks facing the insurance giant still too great? In The Motley Fool's premium report, Financials Bureau Chief Matt Koppenheffer breaks down the key issues you need to know about if you want to successfully invest in AIG. Simply click here now to claim your copy, and you'll also receive a full year of key updates and expert analysis as news continues to develop.

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  • Report this Comment On June 17, 2013, at 2:55 PM, garifolle wrote:

    Well AIG is actually down, and it has been so even when the indices where at their highest in the day.

    Could you tell us why?

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