THE MAGNIFICENT SEVEN
(Part 23 of Series: AIG)
by Dr. Stephen Rinehart
May 18, 2005

Background:

The Magnificent Seven is a chronicle about the adventures of Longwave Cycles who rode onto the “western scene” many decades ago (would that be in 1913?). In this episode, we look at the weekly closing prices of Big American International Group (AIG)  from 1984 thru April 2005. Is this puppy on a long stagecoach ride to the Mega Bear Rally (circa 2009) if it can recover by 2008? Was AIG was involved in silver contract manipulation, moving bad debt off books. Some of the “new” blue chips are  dangerous stocks and this puppy’s stock and accounting ledgers maybe facing “K-Winter”.

Big Financial Sarsaparilla – Derivatives, Reinsurance,  M3 deceleration, CEO Gonzo, Delayed 10-K Filings, Accounting Fraud (Billions !?), Coral Re (move bad debts off books), Swiss Re, Cologne Re, Bogus Losses, Barbados, Bermuda, Caribbean, More Derivatives, Asia (2009), CIA Director Candidate, CFR, Billionaires, World Bank, Goldman Sachs, Sanwa Bank (Japan), Uberseebank (Swiss), Lexington, Stonewalling Federal Agencies, etc,etc,etc  and a Rabbit coming Unravelled. Can AIG recover in time for Mega Bear Rally (depends on the size of the Broom)?:

Charts 1 - 3 show the Magnificent Seven (Weekly) Cycles as they look riding thru AIG from a distant past and into the far future. The main “horses” are 17, 28, 38, 56, 72, 175 and 540-week cycles. Chart 1 shows the match of these seven cycles versus the actual closing weekly prices (detrended) for AIG (Weekly) Closings from 2004 – present (April 2005). There was a sharp drop in AIG beginning in Nov 2002 (investigation?) leading to a bottom in Feb 2003. AIG has accounting problems at this point and who picked the current CEO?  Chart 2 shows the predicted AIG (detrended) waveform from April 2005 thru 2006. It shows the possibility of mild rally in the stock (probably after Oct 2005 thru Jan/Feb 2006) provided the accounting fraud is resolved. This waveform suggests a resolution of most major issues by late summer in AIG and perhaps all will be forgiven (except for the small investors).

The Stagecoach To Purgatory (March 2005 – Oct 2009):

Chart 3 shows  AIG predicted from 2007-2012. It strongly suggests avoiding this stock from Dec 2007 thru Oct 2009 (a number of DJIA components are also showing this major downtrend). After Oct 2009, we are predicting a major rally thru Nov 2011. On 11.11.11, AIG may have a coming date with Destiny (i.e., see prior prediction on CitiGroup). Interesting how Sept/Dec 2009 as a date enters into DJIA equities in terms of coming significant major rally following a worldwide recession (Oct 2005-March 2007).

Bottom Line: You may wish to avoid this stock until Sept/Oct 2009. Currently, there are a number of smaller cycles in a downtrend along with accounting fraud issues to be resolved – can you say immunity from prosecution? Is there trouble on this “Star Chamber” Stagecoach? This is a possible contender in late 2009 for a rally. One should consider avoiding this stock totally after March/April 2006 until early 2007.

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

CONTACT INFORMATION
Dr. Stephen Rinehart
Lynn Haven, FL USA
Email