Citi Shares Under $1

Ever heard of the FDIC?

Your money is insured ($100,00 per account, and maybe it was even changed to $250,000 -check the YWN News archives for that story).

And they won’t allow Citi to go under. They will need to cover it somehow.

Many banks have gone bust, and did you hear of anyone who lost their money?

No.

If they do go under, and no-one comes to their aid, it’s a complete meltdown of the banking system, and by then you will only need canned-food and ammunition……

OK…..back to work.

… and as appointed counsel for YWN, I will append the following statement to the Editor’s above:

The views expressed by the YW Editor here are intended only as good advice offered conversationally and should not be construed as professional investment advice. Readers are advised to consult with their financial professional before making any financial decision.

SJS, your feeling is typical of a young, inexperienced investor. I hear from lots of inexperienced investors that “Oh, this is cheap, I’ll buy it and either get rich or lose very little”. That’s not investing, it’s gambling. Buying a lottery ticket is the same thing but better – smaller loss, bigger prize amount.

There’s nothing wrong with doing this here and there. You’re actually doing someone a favor by buying their worthless shares (why do you think people are still selling instead of everyone holding). But there are better uses for your money. And don’t even think of buying in again as it drops to average down; that is a deadly downward spiral.

An experienced investor understands that you buy a winner, not a loser who was once a winner. You won’t “get rich quick” by doing so, but then again, neither will you by chasing AIG, Ford, GM, Citi, or others.

If you’re offering, I’d prefer the Macy’s one because I wouldn’t be caught dead in Bloomy’s. Thanks.

People, we are getting off topic here…

SJSinNYC:

I’m thinking of buying AIG – for just under $500, I can have 1000 shares. If they really go defunct, I lose $500. If not, I can probably retire on the profit.

not necessarily if they go bankrupt and the government takes over then the shares are not worth anything (i dont really know what i am talking about or how this works but this is what my dad told me, so if someone could explain this i would appreiciate it) 🙂

Yes, you are.

Kids are always buying into “get rich quick” schemes. Buying a stock because it has a low price tag but a big name is certainly one. You can win, you can lose; but mostly you lose. Citi going to $50 is not likely gonna happen. Neither is AIG, Ford, GM, WaMu, or others (WaMu is bankrupt since October, but some still think it can come back). Will one of them hit the ceiling? Maybe. So which one should you throw $500 at? You can’t know.

If it’s “one and done” then why not, go ahead and throw away your money. But these things usually turn into a constant search for the “Deal”. You end up throwing good money after bad, and there’s nothing to be gained except a $3000 capital loss deduction on your Form 1040.

You are missing out on investment opportunities too. Let’s say you hit the jackpot and C goes to $50/sh in 30 years. You’ve made 5000% profit in 30 years, or 32-33% per year (CAGR). Very nice. But how certain is that investment? Close to zero.

Now invest wisely. Choose a solid company with a good balance sheet (not that I’d trust anyone’s balance sheet these days). Say you end up with a 4% dividend and a long term growth rate of 6-8%. This is a much more likely event to occur, and it is also pretty nice. Picking this kind of company is not a 100% thing either, which is why it is important to diversify (spread the risk; most companies will perform this way and only a few will fail). But this $500 investment ADDS value to your holdings, SJS’s (while very popular for its instant gratification qualities) DETRACTS value. Your $500 is a write-off at the time of purchase.

ames: Its your birthday?

What is the value of citigroup/citicorp? There’s a lot of speculation, and a lot of gambling, that’s for sure. It is not a value buy.

But I’m curious to hear what others think. And I’m curious to know what they analyzed in order to develop their opinion. Because the normal sources of information (income statements and balance sheets, etc) are as worthless as the promises of a politician.

The only arguments I’ve heard for buying Citi are 1) Little to lose vs much to gain (which doesn’t account for the relative likelihood of each) and 2) Citi can’t and won’t fail so eventually it must go up.

1 – Why would you go long term with Citi and not have a growth/value portfolio instead? I’d bet that a portfolio beats Citi for returns over 20 years, plus the downside risk is minimized. You’re not going to have the up and down swings that Citi would have along the way.

2 – Who says that the Citi shares you buy today are going to give you a part in the bank that gets saved (assuming that it will get saved)? How do you know that the shares won’t be diluted/dissolved/reverse split? Not too long ago Citi was allowed to split into two companies – the good Citi and the bad Citi. What if your shares give you ownership of only the bad Citi (next time) and the good Citi gets to issue new shares?

charlie, I don’t know. If there is a simple out there I’m sure I would know it, though.

squeak,

you’ve been spending too much time in the CR and not enough maintaining google. I hope you dumped your shares.

http://www.theyeshivaworld.com/news/General+News/34296/The+Day+Google+Went+Down.html

I will try to spend less time here, then.

Closed at $3.55 today.

From the guys who brought you Mathematica, now comes Alpha. Let me know when they get the answer to Life, The Universe, and Everything.

They’re over $54 a share now. Hopefully you bought them when they were selling for pennies.

aig is @ 58 too