Financial Q&A: How to value AIG five months after the bailout
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Q: How would you rate existing and future investments with AIG since the US government has taken control of AIG?
E.L., via e-mail
A: This could spark a new cottage industry: How would you rate the investment picture for any company that has tapped federal bailout funds?
The US government hasn't taken actual control of American International Group Inc., but it has a vested interest. The government has extended $150 billion in loans to AIG since September to avoid a global financial meltdown that could have followed a massive credit squeeze that was strangling the New York company.
Rich Arzaga, CEO of San Ramon, Calif.-based Cornerstone Wealth Management, suggests that you review the current fundamentals of the company as you would with any other investment, and put no more than 2 percent of your portfolio in any one company.
On the plus side, he notes that AIG crumbled from problems at just one of its 81 business units. Its consumer insurance businesses are strong, and several state insurance regulators have assured consumers that AIG, as well as other carriers, are viable and able to pay any claims.
The ironic thing about AIG, says Mr. Arzaga, is that it is the strong profitable units – such as the insurance divisions – that are on the table for sale to pay off the government loan. AIG has already sold its interest in nine businesses. Perhaps those sales have chilled the market toward AIG. Its common stock plunged to less than $2 a share when the government announced the bailout. Last week, it dropped to below $1.
Q: About 35 years ago, I was given 14 $1 bills that were misprinted. "In God We Trust" was not printed on the bills. Are they worth anything more than their face value?
S.C., via e-mail
A: Your money may have some collector's value based upon factors such as age, rarity, and condition. But Kevin Foley, a currency specialist with Bowers and Merena Auctions, a California-based coin and currency dealer, says that the lack of those words most likely "has absolutely no impact on the value of the note." That's because no bills printed before 1957 carried that motto.
Check with a reputable coin-currency dealer if you think the bills have collector value based on some other criteria. One dealer suggested that you look on eBay, where there's a marketplace for currency that will give you a pricing range.
"In God We Trust" was stamped onto coins as early as 1864. The government didn't get around to inking it onto paper money for almost another century.
For more information on how this occurred, visit the US Treasury website (ustreas.gov/education) and look in their fact sheet area. Click on "Currency," then "Fact Sheet: Currency & Coins" for a rundown on the drive to place the motto on coins and, later, bills.