This is a longterm powerplay. Think Ford and General Motors at their bottom prior to GM going bankrupt.
Both were blue chip company who's stock had been severely beaten up by hard economic times. That's a little bit simplistic but it's basically the case.
There were two possible outcomes for both cases. 1: The company goes bankrupt and you lose your investment. 2: The company eventually recovers and you make a ton of money.
That's what we have with Citigroup. The companay has been severely beaten up by hard economic times. The 52 week high is many multiples of the current stock price so any "bad" fundamntals are already built in. Either the company will go bankrupt or you're going to make a ton of money. But I do think it's safe to say Citigroup going under is NOT going to happen. It's very unlikely to happen on its own, and worst case scenario the government won't LET it happen.
Those with the discipline to hang on through the ups and downs will be richly rewarded. This is one to add to your portfolio and just forget about for a while. I wouldn't recommend it as your most major holding, but as part of a well diversified strategy.
I think the issue of RS is now the major setback for the stock to go higher. I mean, what happened to AIG is still fresh in everybody's mind. A reverse split will mean an instant haircut of over 50%.
The government will soon own 34% of common stock. Alweheed (the Saudi Prince) owns 5%. and the government has already invested 45 Billion (with a B). Do you really think these players are going to let C go bankrupt?
I DON'T THINK SO.
I certainly don't begrudge anyone from attempting to time the market with price predictions, but it's very hard to do that.
I'm just speaking from the standpoint of any price in the range it's at now.
Point blank: You WILL make money in the longterm, and likely lots of it. You will *likely* have short term losses at one point or another. But that's almost always the case.
I bought shares of Apple at 135 and it dipped below my buy price at least 3 times. Now I'm up like 18% or so in a short period of time.
Your analysis is correct. Most companies go unders like GM is because people are simply not buying their products . In CITI's case, they are in trouble not because people are not "buying" their products but rather they lost big on a side bet. This is like a plastic surgeon going to Vegas and lost big. However, his means to continue to make good money is still there.