Monday, August 3, 2009

Hilarious story on the gleam that comes from tarnish...

"Tarnished Citigroup looks like it could shine again!"

That's the bold claim made by the headline writer over at the WSJ today. And why not? Cit's a group that's been pounded over the last few years. Stock prices down 50 percent this year (and compare that to the rise in Goldman and JP Morgan Chase stocks this year!)

Apparently, the folks in the know are now thrilled about Citi because "it has put concerns to rest about its viability and capital adequacy."

But there's just one catch... and it's not Catch-22.

It's a lack of profit. The article offers this bit of info, for purposes of clarity:

"A caveat: unlike most of its key rivals, Citigroup isn't profitable now and may not operate in the black next year either."

And that's what I find so funny about this story.

Who cares about profit when the stock price is a good deal and the feds have signaled their desire to prop up the bank at all costs? The tarnish that comes from performing poorly is nothing at all to consider when there's a bargain stock to be had for the portfolio.

In today's market, a company without profit is such a deal. Buy Citi! Buy now!

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