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.


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