repfreak Posted March 9, 2009 Report Share Posted March 9, 2009 Now that Citigroup's share has dropped from USD$85 below US$1, I heard of so many people who wants to buy Citigroup shares... From bus-stops to schools, its everywhere... I am not a expert in this field but I believe everything is in a balance. When someone wins, someone is bound to lose, this is the equilibrium. There are so many ignorant people who do not do their homework and try to make a fortune through Citigroup . They probably think the US govt will pull Citigroup up just like AIG. As far as I know, US govt have already issued a rescue package to Citigroup. Yeap, we know that Citigroup is well known and well established but it may still fall. I think people (including housewifes who stay at home and know nothing of the outside world) should do some research before investing... I mean the new announced to us is definitely old compared to those big players who have information first hand. I am not cursing Citigroup to fall but I hope some of the ignorant I chanced by can do some research before investing... Let's see what Obama can do... Anyway, despite that, I may wish to buy a bit to try my luck. What do you guys think? Quote Link to comment Share on other sites More sharing options...
Guest asim Posted March 9, 2009 Report Share Posted March 9, 2009 i mean, they are far from being the super power they once were. they have lost the confidence of many investors, their credit rating won't stay stable, they have unhealthy debt. having said that, i think they may pull through. it was hard not to vote for the merger choice because I could how there is a good chance that they may just do that, but we must remember that citigroup have a lot of affiliates, intelligent staff somewhere and the government are changing their input from preference to ordinary shares. this indicates strong intention to help citigroup through this mess. but heck, what do I know, who would have known Lehman would collapse?? Quote Link to comment Share on other sites More sharing options...
repfreak Posted March 9, 2009 Author Report Share Posted March 9, 2009 In this case, will u buy the > USD1 cheap shares? Quote Link to comment Share on other sites More sharing options...
Guest asim Posted March 9, 2009 Report Share Posted March 9, 2009 well what pisses me off is that people follow crowds. financials is such a volatile field to invest into. if you can risk manage/ or hedge an investment in such a bank then sure, it's worth a shot. i'd rather stick to fields where there is a little more stability. having said that, if the shares are selling at less than $1, who knows where the share price may be in 5/10/15 years from now. If you can afford the risk, have a crack. Those who bought M.Lynch before they were taken over by B.O.America made profit, those who then thought.. hmm.. I'm going to buy Lehman stocks because they OBVIOUSLY can't go down, they got screwed. "Never put all your eggs in one basket". Only do it if you can afford to lose the investment. Quote Link to comment Share on other sites More sharing options...
cornerstone Posted March 9, 2009 Report Share Posted March 9, 2009 As far as I know, US govt have already issued a rescue package to Citigroup. Just a few.... Quote Link to comment Share on other sites More sharing options...
siesta181 Posted March 9, 2009 Report Share Posted March 9, 2009 They have a very good chance of pulling through but one should not expect to make too much money from it. Citi after all has been nationalised with all the funds the American Govt has pumped into it. It''s better to see how they finance the loan (and that's one hell of a loan) b4 jumping on the bandwagon.. but then what do I know... Cheers siesta181 Quote Link to comment Share on other sites More sharing options...
trailboss Posted March 9, 2009 Report Share Posted March 9, 2009 Robbie? You there? No use asking me but I hope not. Lots of Aussies also have money with CitiBank. Not that I like to see Americans lose their life saveings but this one goes a lot farther than ConUS Col. BTW, why is this in General D? Quote Link to comment Share on other sites More sharing options...
Guest asim Posted March 9, 2009 Report Share Posted March 9, 2009 i think the comment on how the government has pretty much nationalised the bank is pretty important especially in regards to actual returns you may make if you invest in Citi. Remember that the government will try and get as much and as quickly as possible, the money they have given Citi. But just to add further, the overall intention is not to fully nationalise these banks. Bernanke has mentioned that a few times now, and think that the step of converting preference shares to ordinary shares highlights that to a certain degree. Citi will not go in my portfolio. Quote Link to comment Share on other sites More sharing options...
repfreak Posted March 9, 2009 Author Report Share Posted March 9, 2009 Hm.. exactly... "well what pisses me off is that people follow crowds" Sorry, I put it in the wrong thread in my excitement.... @to the rest of the guys: will you grab more citibank shares now? Quote Link to comment Share on other sites More sharing options...
RobbieG Posted March 9, 2009 Report Share Posted March 9, 2009 Value is relative. We don't spend much time thinking about trading value as it relates to price. Something is not cheap if it is under a dollar. Was Bear cheap at $8? How about $3? $2 then? How about zero? And it dropped like a stone from $160 a brick. What is Citi's 52 week high? $27? Is under a dollar still a good value when you consider the path and relative prices of Bear? Nobody predicted what happened to Bear to play out exactly as it did. And the people that bought for value down there got killed. I was shorting the 500 (of which most banks and IB's are a component of) the whole time - and continue to now as Citi crosses into the so called "value" range. That said, we never trade individual equities but indexes only via futures and options, which I recommend individual traders do as well in the form of index funds or ETF's. We also don't trade fundamentally either. We react to what is happening as opposed to what we think is going to happen. Speculation for me doesn't make any sense. So to that end I can't really offer an opinion about why one would buy or short Citi. All I can say is if I were trading it, I would be buying it if it were going up and shorting it if it were going down, but most importantly doing so without really having any opinion about it at all. My Mother is always right, so I just let her tell me what to do. But I never try and outwit her as she can be pretty mean when she feels slighted. LOL. So in closing I would offer you this: Whatever happens with Citi, one thing is for sure and that is someone is surely going to get killed on one side of the trade or another. In addition, the market itself will equalize pricing across all instruments so efficiently that what one can win by betting on it will be limited by "traffic" jams. We have a saying around here which is that we like to stay out of the fight, wait for the winner to emerge and join his entourage. Hop a ride with the winnner, don't try to be the leader... In the case of this trade, the risk required to make a reasonable return is prohibitive. Why not trade something else not quite so volatile? You want to be able to place a reasonable stop on every trade so it doesn't get hit by noise and you can ride out some swings to make a reasonable profit. You also need to find a good entry point. The only reasonable stop on this trade is really zero and the clear entry is also not apparent. If you like to take flyers this one is for you, but you couldn't put a gun to my head and make me trade it, nor would too many other rules based institutional traders. .02 Quote Link to comment Share on other sites More sharing options...
amptor1 Posted March 9, 2009 Report Share Posted March 9, 2009 I was going to buy at $2.40 glad I didn't. I could've bought that low once and made some money but I probably would have held onto it and lost $1.40/share. This stock is horrible and not a good buy. I think it is going to sink lower than $1 so now isn't the time to buy. Quote Link to comment Share on other sites More sharing options...
TwoTone Posted March 9, 2009 Report Share Posted March 9, 2009 Loop moved to the proper sub-forum ... . Quote Link to comment Share on other sites More sharing options...
Shundi Posted March 9, 2009 Report Share Posted March 9, 2009 BoA is less risky... Citi is over-leveraged and will most likely be split up, etc. That being said, I purchased a thousand shares @ 1.01/share... worst case scenario, I'm out ~$1K....best case...it goes over 1.01 per share and the gov't doesn't do anything with it for at least a year so I can save on the capital gains At this point I'm looking at index funds and sector leaders...things that have been beaten up and will more than likely recover... Toyota, BoA, FCX etc. and playing the options game as my hedge/insurance for the gains I already have this year. Quote Link to comment Share on other sites More sharing options...
fakemaster Posted March 9, 2009 Report Share Posted March 9, 2009 God I wish. It doesnt matter what price the stock is when the government owns the company. Quote Link to comment Share on other sites More sharing options...
sbreene Posted March 9, 2009 Report Share Posted March 9, 2009 I will buy Citi as soon as I sell my WAMU Quote Link to comment Share on other sites More sharing options...
fat.tail.event Posted March 9, 2009 Report Share Posted March 9, 2009 FDIC just asked Treasury for another line of $500B. Sounds like they are going to do a big deal. So far, Obama's War on Reality has foolishly been dominated by gauging 'confidence' in the system. Psychologically, at $1 C seems expendable. Opinion is slowly shifting from 'no more Lehmans' to 'can we afford another AIG'. Trader talk says BAC or C go down by May/June. The mob is tired of seeing good money go after bad, and policy makers are responding increasingly with talk about another sacrifice on the market altar to appease them. If GM goes into bankruptcy or some type of structured work out, it will show the public just how efficient that process is, and it may pave the road for more. The Lehman dispostion was a thing of beauty, but everyone was just too focused on markets collapsing. Investors have become apathetic and more apt to swifter action it seems. The IMF playbook when dealing with disasters of this magnitude says: 1) Respond with overwhelming force ($$$) to assert undoubted control over the situation. (cant check that box, we dont have enough cash to replace the $20T in losses we've experienced) 2) Punish and remove the parties at the top responisible for the mess. Wipe out shareholders and certain bondholders to address moral hazard. (cant check that box, so far....but C might be a good start) 3) If the combo of 1 and 2 do not restore order, respond with more and start devaluing the currency ASAP (the US is doing this, but the effects are being offset because the rest of the world is in the toilet at the same time we are) Dont kid yourself about USD strength right now. Its just the one eyed guy in a room full of blind men. Quote Link to comment Share on other sites More sharing options...
RobbieG Posted March 9, 2009 Report Share Posted March 9, 2009 Dont kid yourself about USD strength right now. Its just the one eyed guy in a room full of blind men. Ahem...don't you mean blind children? Quote Link to comment Share on other sites More sharing options...
AllergyDoc Posted March 9, 2009 Report Share Posted March 9, 2009 I will buy Citi as soon as I sell my WAMU Quote Link to comment Share on other sites More sharing options...
Shundi Posted March 9, 2009 Report Share Posted March 9, 2009 Dont kid yourself about USD strength right now. Its just the one eyed guy in a room full of blind men. Well said... gotta love my FOREX friends I've brought them many a round (and sent a few gratitude checks- I know Robbie's done this too) due to some really sound investment advice from my "Forex fanatics" and trader friends... I agree on Citi and BoA to a point...in my earlier post about banks I said BoA is less risky- I should add the disclaimer that RELATIVE to Citi, BoA is less risky...but that's not saying too much in the banking industry at the moment! Still... I think there's a great opportunity to profit from many of the depressed share prices at the moment (Toyota and BoA as I've mentioned before) but regarding long term stability...don't think you're going to be holding some of these financials until you're 70 (and with some, don't think you'll be lucky enough to hold them for more than a year or two at the most)! Quote Link to comment Share on other sites More sharing options...
Demsey Posted March 9, 2009 Report Share Posted March 9, 2009 (edited) Hmmmmm, unfortunately the 'learned' are rapidly losing credibility because the animal has morphed into something 'else'. Not a lot applies anymore. All opinions are moot. 'Playbooks' are obsolete. The talking heads in the media are joking; "Oh h*ll, whatever, I give up on this. I'm just burnt trying to make sense of it, to try and write good copy to sell advertisement for the parent company, who's stock is now down 82% from it's historical highs." When the Warren Buffett's of the world are at a loss, literally, as well as figuratively, then what's left to be said about business as usual and older models? In that other thread, I mimicked a standard; "The stock market will recover before the recession". No. That was an accepted principal. Once upon a time. Now the notion is as absurd as Citigroup being a penny stock by the 2005 mind set. 'Speculation' as an investment strategy may not make sense, but 'speculation' is all there is left, regarding the entire pusuit of or 'industry' if you want to tag it that way. The return of Wall Street? There is no more Wall Street. Purdy much the end of that chapter. DOW @ 14000. That was it. That doesn't mean a lot of fortune cannot be made. It's a Global Investment world now. It's not a time to shift gears, it's time to develope a whole new type transmission. I would say it would be a better scenerio to be emerging from university right now with a Master's in Finance than to have thirty years practical experience in the field. Templeton? Better off dead. What does it matter what Geithner and the Obama administration think about Citi and what can be done to preserve it? I would rather garner the opinion of Prince Walid bin Talal. When he says; "It is all done." It is. I would be horrified to be involved, gainfully, as a fund manager, investment officer, or stock broker right now. Deep into it with the trust and welfare of 'clients' on my books. It would be as if I rotated an aircraft off the ground only to find the principles of aviation, that have sustained me for twenty seven years no longer apply. I am the Wright brothers, but I'm fifty feet in the air, doing 110 kts, out of control, seventy souls on board and I just don't have anyhting to fall back on in the way of training or anything learned through experience. I have eight seconds to discover, explain, and correlate 'aviation'. Edited March 9, 2009 by Demsey Quote Link to comment Share on other sites More sharing options...
fat.tail.event Posted March 10, 2009 Report Share Posted March 10, 2009 As a former physics geek, I totally relate to your aviation analogy. You are dead on. 2008 was the year you deleted 'impossible' from the finance dictionary. During Sept, Oct and Nov last year the 'constants' that existed within financial formulas blew up with the rest of the market. The Gaussian copula formulae and their derviatives that are the pricing backbone of so many of these asset/mortgage backed securities that continue to plague us went from severely broken set of numbers to a scrap heap of them. I would ask you to consider some other thoughts relating to the statements below... Following playbooks to the letter has not and will not work in this scenario. But our team has found some valuable ones that werent even picked up, ignored...and we have profited considerably from their lack of attention. Speculation is all there is left if you base your investment decisions on fundamental data. There are no fundamentals in the equity markets right now. The stock market as a forward pricing mechanism has shut down. But technical analysis and indicators have been excellent tools. They have framed entry and exit points for our trades quite well. We are not horrified, but unbelievably fatigued from screen time staring at monitors and going through multi thousand line excel spreadsheets trying to keep up with this, as you said. Correction...we were horrified on Sept 18/19 when Bank of New York or State Street (still not sure which one) called up the Fed and said they couldnt meet money market redemption requests. If that $150B didnt go out as quick as it did, the world may have ended as we know it. 'Playbooks' are obsolete. 'speculation' is all there is left I would be horrified to be involved, gainfully, as a fund manager Quote Link to comment Share on other sites More sharing options...
RobbieG Posted March 10, 2009 Report Share Posted March 10, 2009 Yeah, I was going to respond with that myself FT. @Demsey (and anyone else who is interested) - you have to understand that fundamental trading is not all there is and people have a tendency to think that as sometimes it seems like it is because it is all we hear about. The Buffets of the world represent that side of the equation only. To that end, one also needs to realize that markets do not exist in vacuums. It is fairly common for people to have the mindset that when a market is up it means that everyone is up, and when markets are down everyone is down. The fact is though that for every person who's portfolio is off 50%, there is someone on the other side of that trade that made the 50%. Half are making money so to speak! The money doesn't simply evaporate. If I lose, somebody wins and vice versa. How else could my firm explain triple digit returns in the big, bad 2008. I didn't get lucky. There were very specific mechancial reasons to explain each and every trade. But that isn't to say I predicted the outcomes either. These are concepts which are impossible to really cover in a thread like this though. But just know if you lose somebody else has your money... But another component I would like to touch on is the concept of size as it roughly relates to things as well. If you are working with tens of billions of dollars or more, size limits the things you can do in trading simply because of the sheer task it can be to "work" large orders as we call it. When WB decides to make choices and drasticaly change a position he is in, he (and many others of that size) can get murdered by increased volatility. Profits can evaporate rather quickly. So not only is he in a loss, he also is certain to lose alot more by the time he unwinds his position. People ask me all the time - "If your system is so great, why doesn't Buffet buy it from you for billions?". Of course my institutional clients know the answer to that and I'm talking about civilians. The answer is that due to his size, Buffet simply can't trade like I do. He couldn't keep up. So yeah, he could use me, but not with more than about 20 million dollars for most of my core strategies and of course that would be a complete waste of his time at his equity level. So in closing, yes - times are very tough for investment type trading strategies designed around fundamentals. But on the contrary, realtively small traders ($20 Million or less) in equity like me have been profiting all the way down. The reason is because we can trade (and have filled all in and all) out relatively small orders (large for for us mortals though) all at once and thus take advantage of all this interesting intraday motion. These are record times for us and we are not few. You just might love being a fund manager right now, depending on what your fund did. I sure do. And not because the markets are down. They are just moving and moving alot. If they were going in the other direction (and if the world doesn't end first they will) and moving alot, we would be enjoying that too. Futures traders like motion. Ranges are the kiss of death for us. We don't lose much, nor do we take many trades, but we can't make much money either in ranges. But if it is moving we can kill it. By contrast, those markets that stay within ranges with nice little travels to plateau "sweet spots" are great for options traders who sell premium and hit home runs with those spots when they get hit. And finally fundamental traders are the most famous as they get the either the glory for looking like they pulled the rabbit out of the hat and predicted the future, or the agony of defeat when they get it wrong. Even Buffet can't win in a market like this dead set against fundamentals. But is is simpler than you think. But the only markets that work well for fundamental traders are long steady bull markets without much volatility. Not much to it really (as long as the trend cooperates) and the bias has been set at about 12% a year to front run them since 1926. Get a few things right and "presto". Fundamental trading is not the only arrow in the quiver and isn't really trading at all most times. Just institutional investing really. The funny thing is when times are ripe for the fundamental crowd, guys like me are sitting there going "well yeah..." a chimp could make money in a bull run with wide stops (that never get hit - lol) and end to end trend days followed by tight consolidation with no uncertainty or downward pressure. Yet they still get the glory because it looks like they called the turn. Now we are hearing from Mother instead who is giving the smack down to the Buffets of the world. But many don't realize that even Buffet has what we call a core strategy and that every core strategy fails sometimes in some markets. It only looks like he is a genius for always getting it right. He is a genius. But it is because of how he trades the bull runs, not how he calls the pitches. It only looks like he is. When you buy companies instead of just trading them things are different. In the baseball analogy, one would say it is easier to call the pitch when you buy the team before the game starts... .02 Quote Link to comment Share on other sites More sharing options...
Samurai Posted March 10, 2009 Report Share Posted March 10, 2009 There was a time when you got to own physical shares and if the stock crashed....you could always use them as toilet paper.....alas.....with everything being electronic now.....you can't even do that Quote Link to comment Share on other sites More sharing options...
Demsey Posted March 10, 2009 Report Share Posted March 10, 2009 Again FT and Robbie, thank you for the time and insights. Both are valuable commodities (pun intended) to the civilians here who may be grasping at straws, bits of intel, that can give us a better hand hold of a bigger picture. You need a 'destination' before you can formulate a 'plan' for getting there. I'm trying to draw a map. My adminstrative contacts that hold my investments do observe a good fiduciary responsibility, I would hope, and in spite of the current situation, I am pleased, with every issuance of reviews of assets, I remark; "Wow, it doesn't look as bad on paper as the media would have you believe." However, I realize those officers are under corporate mandate as to what they will or will not divulge as a point of 'policy'. They are upbeat, confident and maintain they have faith in 'strategy'. I understand that position as a point of doing good business. I just don't know, now, how realistic that position is. I do empathize tho'. I wonder how many people I could have talked into a discovery flight lesson if I wore this T-Shirt to our first encounter; "Aviation in itself is not inherently dangerous. But to an even greater degree than the sea, it is terribly unforgiving of any carelessness, incapacity or neglect." Sterling words for the prospective 'Solo Pilot' about to take on that responsibility, but perhaps too foreboding to the neophyte. Certainly you can glean countless websites for opinion and information on the current finacial, but, as I have found countless times on RWG (incarnations past and present) when the focus of the main board is something that has international appeal and is well aside other world issues. aside; 'watches' you get an uncanny objective opinion on a myraid of topics. There may be agendas here for 'who's the best dealer' or 'who has the best Sub', but outside that box, people may as well speak their minds, and voice contrary opinions to the mainstream. Why not? There is no penalty for doing so. It's why I love RWG and am stuck on it. I do love Rolex, and my replicas, but aside the "Rolex" subforum and here "Off Topic" I have very little practical use of the resource. The enthusiasm of the multicultural demograph is priceless. In the words of those two bards; 'KenMc' and 'Two Tone', respectively; "Replica watches = meh" "Where people gather, life happens" True. True. Quote Link to comment Share on other sites More sharing options...
jonthebhoy Posted March 10, 2009 Report Share Posted March 10, 2009 I've used it before in another thread, but this pearl of wisdom always raises a chuckle...... "If at first you don't succeed, then maybe skydiving isn't quite for you." What this has to do with Citibank, only God knows..............and he's keeping his own counsel at the moment! JTB Quote Link to comment Share on other sites More sharing options...
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