16 September 2008: The government rescues AIG
One day after Lehman failed, the Federal Reserve agreed to lend AIG $85 billion in exchange for a stake of about 80 percent. The insurer had sold enormous amounts of credit default swaps without enough capital to cover them, and its collapse threatened banks around the world. The rescue grew much larger later. Shareholders were heavily diluted, and AIG became a symbol of hidden risk.
The lesson: Risks hidden in complex contracts can sink a company that looks like a stable insurer.
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
- 10 November 2008: AIG's bailout grows to about $150 billion
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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