Tuesday, January 19, 2010

Citi: A fool and his money are soon parted

As I'm writing this article Citi (C) is the leading volume leader today and is out trading the second place stock by 6 to 1. They announced another loss and the stock goes up. I think it's time you all take a step back and look at what you're doing.

If I told you I had a stock that in December 2006 sold for 51.54 and last year in March sold for 97 cents, just announced that it lost 7.6 billion dollars in the last quarter, has negative cash flow, negative earnings, negative profit margins and negative return on investments but is a real buy you would laugh right in my face.

I keep reading about all the penny stock pump and dump stocks and I think this one qualifies. This time instead of a smokey back room with a bunch of kids fresh out of college with liberal arts degrees calling every sucker who has ever expressed an interest in the stock market we have some of the largest brokerage firms in the world endorsing this stock. There are actually 7 buys and only 4 sells out there by major firms. They all have this too big to fail mentality and they as selling it to all the sheep who are just dying to be slaughtered.

Let's look at the facts. I already mentioned the fundamentals and they stink. The stock is trading below it's 50 & 100 day moving averages and the 20 day moving average has been sliding down since last October. Barchart's 13 technical indicators have a sell signal on 8 of them for a 56% sell rating. There are approximately 6000 tradeable stocks to choose from and you think this is the best one you all can find?

My recommendation: A fool and his money can be parted if you think that Citi (C) is the best stock on the market. I am not a buyer of this stock and it would take a big, big change in the fundamentals of this sinking battleship to make me even take a flyer here. You really can't find a better stock to buy with your hard earned money?

Disclosure: I hold no position in Citi at the time of publication.

Jim Van Meerten is an investor who writes about financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

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