Friday, February 27, 2009

Looming Crisis for Insurance Companies?


With indications of needs for continuing bailout at AIG, the spotlight has turned from banks to insurance companies as potential sources of crisis. As we can see from the insurance index above ($KIX), that sector has been more than cut in half since September and is now sitting at bear market lows, below its declining 40-day VWAP (green line).

One economic factor that could turn recession into depression for millions of families would be the loss of life insurance and retirement annuity benefits that many families depend upon. With financial ratings of life insurers being cut and no clear indications of government support, this may be the unappreciated side of the current financial crisis.
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4 comments:

Anthony said...

Scary thought b/c it turns out my mom has a massive amount of her retirement in an annuity that some dumbass from Merrill put her in many years ago.

Kevin said...

Anthony:

Scary thought b/c it turns out my mom has a massive amount of her retirement in an annuity that some dumbass from Merrill put her in many years ago.

I feel your pain. When I looked at my wife's retirement portfolio after we got married I asked, "Who designed this, vandals?"

Turns out it was some sort of investment looter from a very large mutual fund company in Boston.

I moved almost all her crap to cash over the summer (yay!), except for one thing, a Merrill zero-coupon note. (Thank goodness they were purchased by Bank of America!) But the dang thing trades by appointment only, so I may have to hold it until maturation.

This is why I only trade the most liquid futures, stocks, and ETFs. It's hell being stuck in an illiquid instrument.

Valera said...

Dr. Brett,

In one of your books you referred to using a biofeedback machine. Would you please recommend the model or at least the type. There is such a variety of them out there. I am fairly new to trading and often find myself in a situation when my emotions override the rules. I hope biofeedback machine will help.

Thank you,

Brett Steenbarger, Ph.D. said...

Hi Valera,

I'm currently using the emWave biofeedback unit--

Brett