Jan

7

I have no basis for either believing or disbelieving that certain market participants had advance information and/or profited from 9/11. The literature is not compelling because while there was indeed some elevated put buying, there are other discrete examples of elevated put buying when nothing horrible happened. I will, however, point out the following irrefutable facts:

1. Post 9/11, AMR stock dropped from about 28.125 to about 20.00 per share when it re-opened on volume. A loss of about 30%…for a truly rare catastrophe.

2. Just a few weeks ago, on 9/30/2011, AMR stock dropped from 3.00 to 1.75. A loss of 42%. (Where are the academic papers about insider trading on this date?)

3. AMR's stock from the period of 9/17/02 to the present went from 20.00 to 0.40, a loss of 98%. This demonstrates once again that the really big money is made in being right about the underlying fundamentals of a company. And, it further illustrates Warren Buffett's saying that investors would, as a group, be better off if the Wright Brothers had crashed and burned at Kitty Hawk. The airline industry continues to produce an ever-growing lifetime net loss for investors; why people (other than index funds) ever own airline stocks (except as a short term speculation) remains a mystery to me.


Comments

Name

Email

Website

Speak your mind

2 Comments so far

  1. Ed on January 7, 2012 7:57 pm

    If I remember correctly for a time southwest had the greatest long term return of any stock. by the way I refuse to use the pc term flight attendant. If we all refused to use the pc language perhaps we could turn this county around that much faster.

  2. Lawrence Schulman on January 16, 2012 6:40 pm

    AMR failed to secure a cost-cutting labor contract with its pilots’ union back in October 2011 which left it vulnerable to continued high costs in a time of shrinking demand. Also it has the least fuel efficicent fleet of any US carrier so the high price of jet fuel helped to do them in. I think there was enough public information on this one to avoid the stock. Actually it was the insiders who lost the most money since the stock tanked even if they sold out at some point along with the dumb money bottom-fishers.

Archives

Resources & Links

Search