Stephen Frankola sends: Monday’s market action was volatile and interesting, with a couple surprising underlying themes.

The S&P 500 opened higher, peaked midday while up about 2%, and ended up closing marginally lower. Many of the previously worst-performing stocks (financials) had daily charts that resembled the S&P’s movement, albeit with supercharged movements.

As AIG made news by listing important counter-parties and declaring that it planned to pay bonuses, the shares exploded higher.

Shares logged a few trades at $1, which was an 100% daily move. Even as trades ticked lower with general market weakness at the end of the day, shares still logged a 66% daily gain. Though the percentage gain is obviously impressive, it pales in comparison to the enormous wealth that was lost as AIG fell from real-company valuation to penny-stock territory. But theoretically, an investor that plowed some money into shares at $.33 recently would have been very pleased with this recent performance.

Some other examples of beaten-up stocks that outperformed today:

E*Trade (ETFC): +9% today
Citi (C): +31% today
Bank of America (BAC): +7%
Freddie Mac (FRE): +21%

Obviously all stocks mentioned are ultra-risky, and some may ultimately be worthless. But such extreme movements are heartening for investors who own shares of said companies, and if any major development in the market or indivual stocks (like ETFC getting TARP money, or the alteration of MTM rules) happens, shares could explode higher. But “investing” in any of the five companies I named (I own shares of ETFC and AIG) is still more like gambling than rational, careful capital allocation.

People courageous (or stupid) enough to invest will continue to see gains or losses that are caricatures of the general market.

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Disclosure: Author is long ETFC and AIG.