The Greatest Risk is Not Taking One - AIG Commercial

Ever since the AIG bailout, I've been looking for one of the 'The Greatest Risk is Not Taking One' series of commercials AIG ran in early 2000/2001 by Ogilvy and Mather.

Without any further delay, I present for your viewing pleasure:

Apparently, the greatest risk wasn't not taking one but rather taking lots of little risks with leverage.  We should have known better; it can't be good news when an insurance company flaunts its risk taking.

JP Morgan (JPM) buys Bear Sterns (BSC) and Fed cuts rates

As many people guessed, JP Morgan (JPM) is buying Bear Sterns (BSC) with guarantees from the Federal Reserve. (For once, CNBC was right.) The Fed also cuts 25 basis points.

I am really worried now. For one thing, the price for the JPM takeover of BSC is $2. Does that mean the shares are going to open at $2? Why were there so many dumb people in it at $30-35? I mean, even CNBC kept saying that equity was wiped out. If BSC was so mispriced, are other banks also mispriced? I guess we'll find out when the market opens.

Why cut rates when there is a FOMC meeting on Tuesday? Doesn't that signal the Fed is panicking?

I have a feeling that Monday is going to gap down on heavy volume (don't have any theories, just a feeling). The news doesn't make me feel confident.

Microsoft (MSFT) bids for Yahoo (YHOO), Short XHB?

I missed the boat. The 31 a share offer from Microsoft for Yahoo has pushed the price to the 29 level. I got a bit greedy with how much premium I was trying to sell the put options. I could have made instant bank but now I got nothing.

On another note, this rally makes me want to short the S&P Homebuilders ETF (XHB). The market seems to be on looking at the good news and ignoring the stream of consistently bad economic indicators. Even though the government is bailing everyone out, the homebuilders are pretty low on the list. I tried to short a small position (just to see what it's like since I've never actually shorted stocks before) but couldn't borrow any shares. So I guess I have to just sell calls on it.

I also got out of some DRI options. There's a good chance it is going back to 20. Casual dining is a tough business right now.