When in doubt, Take them out

On Tuesday morning, the Dow Jones dropped a cool 340 points, most likely due to the government's decision to bailout AIG. They agreed to an $85 billion dollar bailout, and the government now owns about 80% of their stock. AIG is an international company, with financial dealings around the globe, so the government saw another Lehman Brothers Holdings Inc. type bankruptcy coming up. But, AIG is only down to 2.70 a share, while other investment houses that have already basically gone under are all the way down, like LEH stock, which is selling at about .11 cents a share.

Furthermore, Washington Mutual, and Goldman Sachs Group are both privately owned, and under intense scrutiny. This morning, Goldman Sachs dropped about 30 dollars and is still on the decline as I write this. But, the overall price is still just over a hundred. Washington Mutual has basically dropped off the charts, at just over 2 dollars. In London, one of the largest home loan lenders had rumors of a buy-out, that also caused their stock to drop dramatically.

So, until the housing market turns around, these large investment, and mortgage houses will be like the plague to investors, and rightly so.