NEW YORK ( TheStreet) -- It used to be that tech stocks could give you the equivalent of a thrill ride -- a big potential payoff but some bellyaches along the way. Since the financial crisis started last year, it's been insurers' turn, and even though many companies have become more stable, there are still stocks out there for adrenaline junkies.
To make money off those three stocks, it's not important whether you think the companies are solid investment propositions. There are ginormous risks involved, and you should consider them speculative investments. Each has compelling reasons why, and why not, to invest but, either way, the risks could turn into massive rewards.
About a week ago, AIG was trading around $39, MBIA $4 and Radian $6. Their 52-week trading ranges speak volumes about volatility: $7 to $56 for AIG, $2 to $73 for MBIA, and $1 to $12 for Radian.Since then, MBIA reported a third-quarter loss of $728 million and AIG had the (mis)fortune of receiving the misguided blessings of ratings company Moody's, followed by news that Chief Executive Officer Robert Benmosche was considering calling it a day. (He later said he's staying.) On Tuesday, the shares of AIG, MBIA and Radian fell 4.2%, 14.4% and 4.4%, respectively, from a week earlier. Yesterday, AIG dropped 2.4%, but MBIA jumped 6.5% and Radian rose 3.2%. With the three companies, there's a difference between perceived and real risks. Look at beta, a measure of volatility, a risk factor. Radian leads the field at 2, followed by MBIA at 1.72 and AIG at 1.38. (The overall market has a beta of 1.) Tuesday's trading was a good example of beta. MBIA tumbled 27%, Radian tumbled 12%, and AIG rose 3.9%.
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