10 November 2008: AIG's bailout grows to about $150 billion
The US government restructured its rescue of insurer AIG, expanding the total package to roughly $150 billion only two months after the original $85 billion loan. AIG had written enormous amounts of credit default swaps, insurance against bond defaults, without setting aside enough money to pay. Its collapse would have hit banks worldwide. Shareholders were largely wiped out, while its trading partners were paid in full.
The lesson: Selling insurance against disasters is easy money until the disaster arrives.
What it meant for investors
$1,000 in AIG at the start of 2008 → $69.57 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. That is a loss of $930, while a plain index fund over the same years made $3,626.
What AIG teaches: A small, poorly understood unit with concentrated risk can sink an otherwise sound giant; tail risks matter more than average profitability.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2008 | $1,150 | $69.57 | $4,626 |
| 2010 | $30.00 | $2,667 | $6,071 |
| 2012 | $23.00 | $3,478 | $5,312 |
green = beat the S&P 500 · red = lost money
What if you bought AIG? Every starting year and the full story →
More AIG history
- 2 March 2009: AIG posts the largest quarterly loss ever
- 16 September 2008: The government rescues AIG
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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