Is Citi becoming too large / exposed?
 

What do you guys think? I would like to inject some financials back into my portfolio as it is starting to become biased with commodities.

It seems Citi is one of the few large banks left and is still trading at a pretty low price. Is it safe to jump in now and hold for about 5 years or are they taking on too much exposure? Same deal with Bank of America for that matter.

Expert advice appreciated.

Thanks :hello:

Before you act.....think to yourself why such stocks are such low prices.

You are probably thinking of jumping in because you saw Warren Buffett's Goldman Sachs deal. We aren't Warren Buffett. He got one of hell of a deal for 5 billion. On that note....try to glean as much info on who/what is injecting capital into Citibank, and how much, if that is who you like, before you decide. That is the first thing I would look at besides the F/S....like statements mean anything these days.

Thanks GPMike.

I don't understand how these banks (Citi and BoA) can absorb as much sour debt as they are taking on. I mean, BoA took Countrywide (lawsuit and all) and Merril Lynch. That is ALOT of bad debt...

I think Citi only bought the banking part of Wachovia. I didnt read too much detail but I dont think they bought all the bad debt etc. It wasnt a bad move IMO for Citi to grab it while they could. If Wachovia had been left out there for open bid they would have collapsed like Wamu did out of account holder panic. So Citi jumped in quick and took the best part of the Wach.

If the govt purchases the assets they win, big. C will win the biggest. You will see a double fairly quickly. However, the downside risk is difficult to ascertain. Zero isn't out of the realm of possibility. I'd vote for JPM, WFC, or BAC. The upside gains aren't as high but if any of those guys go to zero, it's over.

Be careful when playing in the financials......housing is still falling....and most of these banks still are holding loans that people will default on....or walk away from.


I would be wary of most of these banks buying out other companies.....they could also see problems in the future.

This could get pretty bad!


I like commodities long term......I hold them...and continue to hold them. Even after this large correction.

The reasoning behind it is....

I believe the dollar will weaken.......we don't have the productive capacity or tools to strengthen it really. if rates increase.....the housing market will get weaker...and weaker. I just don't see rates increasing anytime soon.

now on the other hand, peak oil is still around the corner....we are still pumping out LOTS of oil and at some point...we will have to switch to alternatives. All the alternatives I know need infastructure...and materials. some of these materials are in high demand...and short supply....those are the spots you want to be invested in. Think about electric cars...hybrids, electric engines, batteries, etc. I found the materials that are in tight supply/demand in those components....and invest in them. They should do very well long term. I would play them through future indexes like DBC, and also the producers....but remember...as energy prices increase or we hit oil constraints....the miners margins will decrease....and the cost to put in infastructure and everything else will increase making alternatives more and more expensive...even when we have to put them in.

Its going to get ugly regardless of this credit crisis........

http://www.youtube.com/watch?v=9Ed9jsKAOHU

http://www.youtube.com/watch?v=rh6x9gA2u-A
Not sure if he has all the dates exactly right.....since demand has fallen a lot recently....but its coming soon.

Citi is trying to buy deposits like any other bank (JPM, Wells Fargo, and B of A) that either managed to account for their sins early in the game and recapitalize while it was still possible, or managed to pass by the mortgage trough without gobbling down too much of that swill. Imagine if you could literally buy money for pennies on the dollar and then have the government absorb all the lending business. Retail (Checking / Savings / CDs) banking is still very much a money making operation.

When this period passes you'll have a handful of banks that dominate the country in deposit bases and branch coverage. Size is very much king in the banking industry.

All I can say is watch out on this one especially with the wach,citi,wells lawsuit on its way.

More bodies will hit the floor before this mess is over. Don't confuse hope with strategy by investing in junk unless you are willing to take the risk.

I'm just trying to comprehend what is happening right now. I am very young (23 a few months ago) and have been trying to stash as much away as I can now. I have been maxing out my Roth at work to get the company match and have been trying to put between $300-$500 a month into the market. It is just depressing to diligently save and invest only to watch it disappear (on paper at least.) I am past the point of selling and am now trying to buy more than ever. Just trying to pinpoint some good values while everyone else is running away. I do appreciate all of your advice; I'm sure most of you have been doing this much longer than I have.