-- Posted Tuesday, 11 March 2008 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Tuesday, March 11, 2008

“Phenomenally accurate forecasts” 

Sometimes we feel blessed not to possess a crystal ball, since, if we’d asked the wrong question of it a year ago, the correct answer might have led us seriously astray.  “At what price will Citigroup be trading a year from now, oh wise and powerful Oracle?”  Some may recall that the stock hit an all-time high of $57 at the beginning of 2007. But had a crystal ball told us it would touch $20 before this year was even three months old, we’d have assumed the world was about to end. After all, we’re not talking about just any bank. Citi’s corporate roots go back to 1812, and the bank grew to be the largest in America before the new century began. Citi was the first bank to surpass $1 billion in assets and by 1929 was the largest commercial bank in the world. As recently as last September, Forbes ranked Citi as the largest company in the world, with total assets at the time of $2.4 trillion, supporting a global staff of 332,000 and 200 million customers. But look at it now:

How the might have fallen!  Citi’s capitalization has in fact been shrinking so rapidly of late that the firm probably no longer ranks even among the top 25 banks. And although Citi shares fell a further 5.8 percent yesterday, it’s possible that still more-punitive days lie ahead, since there has been so sign yet of climactic selling.  Rick’s Picks has been projecting a big bounce from exactly 16.80, but the stock’s oil-patch backers from Dubai and Saudi Arabia will not likely be comforted by the prospect; nor will they be averaging down, since that would push their equity stake above the 5% threshold that triggeris intense regulatory scrutiny. 

Citigroup unfortunately is not alone among banks whose stocks have been savaged in recent months, and the amount of capital that has vanished from the financial system as a result is growing by tens of billions of dollars per day. By the time Americans get their tax rebates in May, bank losses could be nearing the trillion-dollar mark. Does anyone seriously believe that, at that point, a piddling $160 billion fiscal stimulus will have a measurable impact on the economy? If the headlines are anywhere near as grim then as they are now, Americans won’t be buying big-ticket items with their rebate checks, as policymakers are praying they will, but paying bills and retiring debt.  

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Tuesday, 11 March 2008 | Digg This Article | Source: GoldSeek.com

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