Hot Topics

A look at the topics our bloggers are tackling this week:

Louis Navellier says the "Government Is Merely Putting a Band-Aid on the Credit Mess".

Steel Giant, Arcelor Mittal (MT) Weighed Down By Negatives according to Jon Markman.

Homebuilders are rallying on and off this year. Tom A tells us how he plans to invest.

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Articles

The Bull/Bear Report - American International Group, Inc. (AIG)

Insurance and financial company American International Group, Inc. (AIG) took its turn at the credit crisis whipping post by recently reporting larger losses than expected. The bigger problem than the losses was the apparent lack of understanding of when and if the crisis will cause further damage to an already wounded balance sheet.

At one point in its history AIG was the glamour boy in finance attracting some of the best and brightest minds to its shop. The company led the way in structuring and trading complex derivative securities that are now causing so much trouble.

Of course when times are good and profits are rolling in, nobody stops to notice that maybe the company was succeeding due to its own version of the pyramid scheme. It sure seems like it to me.

Now the bill is coming due erasing billions of dollars in capitalization. Investors reacted accordingly by sending AIG shares below already discounted levels.

Once trading for over $70 per share AIG lost more than half its market cap to current levels in the low $20's.

Does such a state provide an opportunity for investors?

I'd be skeptical.

Get more of Jamie's take on AIG, and find out what two of our top bloggers think when you continue reading this week's Bull/Bear Report here.

Bull/Bear Report: Should you put the brakes on GM?

There sure has been a ton of destruction in the market this year. A credit crisis, high oil prices, and a recession have conspired against stock values. It would appear that no sector is immune to the carnage although some are getting hit much harder than others. One space that has been absolutely crushed this year is the auto manufacturers with the American companies, General Motors (GM) and Ford (F) leading the way down. It should be no surprise given the emphasis on gas guzzling trucks and SUV's, but to lose market share to foreign car makers makes the current state all the more troubling. All of this could have been avoided with a little planning. Oil has been rising steadily for many years and yet neither GM nor F made any effort to transition to higher fuel economy vehicles or alternative vehicles. Ask Toyota how they feel about making their hybrid car today. They are laughing all the way to the bank. The demise in Detroit has been of epic proportion, but maybe that is the time to get interested.

I made GM our stock of the week after having a great discussion about the company in our InvestorPlaceBlogs chat with Jim Jubak (read a transcript here). While it is fashionable to bash the company, it very well may be a good time to buy. From my perspective the opportunity to compete with a line of vehicles that the market seems hungry for will be just the right tonic for GM. The bad news is out of the way and things can only get better. Or can they get worse? Indeed, without a successful turnaround the company may very well blow through the remaining billions of dollars of available capital. That seems a stretch to me as the company has appeared to endure the worst of it. That capital base should help the company turn the corner to a new era of car making. Lower operating expenses should help as well. I would be a buyer of GM at current levels, but what do you all think.

Read on for two opinions on GM from our bloggers.

Bull/Bear Report: Build a Bridge to Chicago Bridge and Iron (CBI)

They say what comes around goes around. Enjoying the fruits of an unprecedented global economic boom that resulted in historical rises in oil prices, Chicago Bridge and Iron (CBI) saw its business grow substantially over the last few years.

Highly leveraged to the oil and gas industry (despite the name, CBI is not a bridge builder), CBI is a global engineering and construction firm that builds refineries, liquefied gas terminals, and pipelines. The company is involved in some of the biggest projects in the industry around the world.

Coinciding with the rise in oil prices, shares of the publicly traded company tripled in value or more since 2003. A strong backlog of projects with no end in sight gave investors comfort that cash flow and profits at would be steady and strong for the foreseeable future.

Ah, but wait a minute. These are huge construction projects that we are dealing with here that require tons and tons of raw materials and labor costs. What happens to the profitability of these projects when inflation hits?

Continue reading to find out...

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