Time to buy Citigroup (C) ?

[Beet]

Citi has seen its stock drop from $55/share to $16.2/share since October, and now has a forward P/E ratio of just 6.45, making it a massive value stock. It is also trading well below its 50 and 200 day moving averages. According to morningstar.com, its Price to Book ratio, or the ratio of its stock value to the estimated hard assets owned by the company, is only 0.8. In other words, even if it made no profits, just the net assets owned by the company is worth more than its market capitalization. I think these are absurd numbers for a Dow component and one of the nation's largest banks.

[King]

What do you mean by buy?  Stock purchase or government bailout?

It could mean either one these days.

[Conan]

What do you mean by buy?  Stock purchase or government bailout?

It could mean either one these days.

Stock purchase. I have already bought very little Citi stock. I will wait a little longer because I believe it will still go down, but I plan on purchasing much more. Citi has over $1 TRILLION in assets and is restructuring its leadership, which is a very competent group of people.

[Fmr. Pres. Duke]

It's a great time to buy, and that would be a good pick. You know it has to come back eventually. C won't go under. I wish I had money to buy it with, though .. Outside of AAPL, all my stocks are down pretty substantially.

[MODU]

Citi is on my watch list. 

[Fmr President & Senator Polnut]

Most of these big stocks will rebound - just a matter of time.

[Sam Spade]

The time will probably appear, but I don't think the financial stocks are out of the woods yet, no matter what the P/E says.

I also would want to be completely sure that Citigroup's new management is as completely incompetant as everyone in the past has been.

[StateBoiler]

Courtesy of Bloomberg:

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Citi's not going to go under, but it's not going to survive in its current form either. When all is said and done, it'll be in 3 or so pieces.

If you want to buy it, hey, the power to you. We'll see in six months whether you were a genius or catching a falling knife. My personal opinion is this crisis for a bunch of companies has some legs left.

[Sam Spade]

Yah, the $1.1 trillion black hole is a real problem.  And as nutso Cramer pointed out yesterday, they're starting to sell good assets to chase after the bad ones.

So as I said before, not yet.  And the time may be never.

[dead0man]

What does this mean to the guy that sends a little over a grand a month to citi for his home loan?

[MODU]

Ford has reached my buy point, and I'm waiting for GM to fall some more as well.  If Citi comes down more, I'll have to pick it up.

[Small Business Owner of Any Repute]

What does this mean to the guy that sends a little over a grand a month to citi for his home loan?

As a guy who sends significantly over a grand a month to Citi for his home loan... not much.

(Coincidentally, given the circumstances behind Citibank writing my loan... I am not surprised in the slightest that the company is in the midst of a crash-and-burn.  I saw this coming a mile away.)

[Torie]

I don't buy individual stocks. That is called speculation. In any event, how can one value a company, when nobody knows what its assets are worth, because the market for so many of them is so illiquid?  The real estate market has farther down to go by the way.

Just buy an index fund and be happy, and don't be more than 50% in equities. KISS.

[Beet]

I don't buy individual stocks. That is called speculation. In any event, how can one value a company, when nobody knows what its assets are worth, because the market for so many of them is so illiquid?  The real estate market has farther down to go by the way.

Just buy an index fund and be happy, and don't be more than 50% in equities. KISS.

How do you build a portfolio without individual stocks? And how is buying an index fund any less 'speculative' than buying a portfolio of individual stocks? They are, at the end, the same thing.

[Jacobtm]

Ford has reached my buy point, and I'm waiting for GM to fall some more as well.  If Citi comes down more, I'll have to pick it up.

I understand that you think these companies are so big that they'll inevitably rebound, but doesn't it make you a wee bit wary to buy failing companies?

[??????????]

Ford has reached my buy point, and I'm waiting for GM to fall some more as well. 

Run Run from any American auto companies!

[Torie]

I don't buy individual stocks. That is called speculation. In any event, how can one value a company, when nobody knows what its assets are worth, because the market for so many of them is so illiquid?  The real estate market has farther down to go by the way.

Just buy an index fund and be happy, and don't be more than 50% in equities. KISS.

How do you build a portfolio without individual stocks? And how is buying an index fund any less 'speculative' than buying a portfolio of individual stocks? They are, at the end, the same thing.

One is diversified, and one isn't. The Total Stock Market Fund has 5,000 stocks in it, basically the American market. You can buy another fund, that basically owns the rest of the globe. One doesn't get a richer expected return for risk that can be diversified away, with some possible caveats. If you take risk without being paid for it in the form of higher expected returns, that is speculation, not investment.

[Beet]

I don't buy individual stocks. That is called speculation. In any event, how can one value a company, when nobody knows what its assets are worth, because the market for so many of them is so illiquid?  The real estate market has farther down to go by the way.

Just buy an index fund and be happy, and don't be more than 50% in equities. KISS.

How do you build a portfolio without individual stocks? And how is buying an index fund any less 'speculative' than buying a portfolio of individual stocks? They are, at the end, the same thing.

One is diversified, and one isn't. The Total Stock Market Fund has 5,000 stocks in it, basically the American market. You can buy another fund, that basically owns the rest of the globe. One doesn't get a richer expected return for risk that can be diversified away, with some possible caveats. If you take risk without being paid for it in the form of higher expected returns, that is speculation, not investment.

But what if the expected returns are higher? The whole point of investing in a particular stock or portfolio rather than an index fund is that you can miss out on opportunities for getting a higher return. The index funds are weighed down by blue chips and other large companies that have slow earnings growth. If your time horizon is long enough and you're willing to take the risk, there is no point in taking such a conservative strategy. Besides, even if you do invest in an index fund for the sake of seeing its value grow and are not earning dividends or other interest from it, that is technically considered speculation as well. There is no guaranteed "promise of safety of principal" or satisfactory return.

[2952-0-0]

Hopefully no one here put their life savings into this thread.

[Beet]

If you'd bought then and sold after the second quarter earnings report you could have sold it at $22.

[Zarn]

Especially for the mid to long term, stay away from the auto industry.

[Fmr. Pres. Duke]

It's a great time to buy, and that would be a good pick. You know it has to come back eventually. C won't go under. I wish I had money to buy it with, though .. Outside of AAPL, all my stocks are down pretty substantially.

LOL

If only I knew how much I'd be down come February of 09. I was rich in comparison!

[Sam Spade]

Yah, the $1.1 trillion black hole is a real problem.  And as nutso Cramer pointed out yesterday, they're starting to sell good assets to chase after the bad ones.

So as I said before, not yet.  And the time may be never.

Wish I had done the reading that I did on these financial institutions after the election in July.

Would have given you a 100% no answer, instead of this.  Instincts were correct, just not the specifics...