Ultimately, We Are Responsible... AIG Holds First Shareholder Meeting Since Collapse

Oh, this story is just so heartwrenching. I finally understand the mistake I've made in purchasing AIG shares.

Rather than contending with institutional shareholders on what's considered fair to all shareholders of the company on any future issues, individual shareholders will need to battle the complacent U.S. government - far worse, in my opinion. As individual shareholders, our voice is only 20% of votes - which is a no-win situation. Even if all 20% of us agree, we're still only a minority. No wonder that horrendous reverse split scenario was approved.

One of the shareholders at the AIG meeting asked a very poignant question: "We don't see anybody being held accountable. Who's responsible? And who is going to be held accountable?"

The short answer is: ultimately, we as individual shareholders are the ones responsible. No one else will ever be able to safeguard our portfolios better than we will. So, we've got to be the ones doing the due diligence and creating a contingency plan.

Right now, I've only got a very small amount of money to invest, but I've got to maximise the effectiveness of this capital on all future trades. To start with, I recently created an asset allocation plan to determine the amount of capital I would invest every year in each market that I trade, including equities, forex, corporate bonds, and cash reserves. As my knowledge on investing expands, I plan to add other investment vehicles to my overall asset allocation plan. I intend to evaluate the performance of each investment vehicle on a bi-annual basis to determine if I need to rebalance my portfolio. By adhering to this plan, I will continue to ensure that my portfolio is well-diversified. I will also be able to quickly take action in case there's a once-in-a-lifetime opportunity presenting itself in Market A relative to Market B. Opportunity costs are often overlooked in my portfolio planning, so I've got to account for this in the future.

Secondly, I also created a portfolio targeting plan for my equities. This is basically a scenario analysis that enables me to forecast potential profit on positions by targeting the 52 week high and the all-time high. Other potential price targets could be 50% of 52 week high or 50% of all-time high, depending on your time horizon. The really good thing about this scenario analysis is that I started plugging in different numbers of shares - essentially playing around with the position sizes to see how that would affect P/L. This is very enlightening. On some positions, if you add more shares, you get a much better profit. Obviously, it's better to do the scenario analysis prior to buying any shares. Right now, I've done the opposite, which is buying the shares prior to the analysis. In the future, this will change. I will not only do this scenario analysis, but will also look at it from an OTT view - that is, I'll compare a few different stocks at once and choose the one that yields the best reward with the least risk.

Finally, I've got to make up for lost time. I've been financially irresponsible in the past, so now I've got to be much more careful and diligent. Rather than jumping in head first, I've got to first test the water a bit. After all, ultimately, we are the ones responsible.