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We, as Americans, Actually Bankrupted AMR

NEW YORK ( TheStreet) -- Maybe I'm being a jerk, but, really, who's been buying AMR (AMR) stock for the past 12 months? I really want to know, so send me an email.

When I woke up this morning, my wife told me about the bankruptcy announcement. Certainly this was not a shock to me, but when a name that big goes down -- the parent company of American Airlines -- it's still news. I guess my core curiosity is: Who was betting the other way when a stock chart does nothing but go down in a straight line for a year?

It reminds of the dot-com days when smart-ass brokers I worked with would occasionally short a hot stock like JDS Uniphase (JDSU) or Yahoo (YHOO). What made these trades legendary shorts? Most of them got royally killed before the actual end of the bubble. Just imagine shorting Yahoo at $100 because of a ridiculous P/E, then see it rise to over $200 in short order. You get wiped out. Nobody likes to tell those stories. It's only the guy who shorted the dot-com crew at the right time who gets the Vanity Fair profile.

This is no different. I actually do know why people buy AMR. Airlines are a good trading vehicle that will loosely correlate to the change in oil prices, business spending and takeover rumors. If I looked back at confirmations from my trading days, I would see some AMR trades here and there. In a word, stupid. Why would anyone trade on the long side of an industry where there is too much capacity and strict competition to be the cheapest? Or, more to the point, why do airlines do this to themselves?

We as a society help facilitate stupid. Let me give you an example. About a year ago, I started to travel more for business. I made the mistake of asking my intern to start picking the cheapest routes to cities I frequented in the Southwest.

Boy, did I learn fast. There was the trip to Denver on a prop plane. As I boarded the flight, it was clear not a single person on board was a business traveler. It was like seeing a group of country bumpkins ride the escalator at the mall for the first time. Was it worth the $50 savings? Hell no.

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