Saturday, November 1, 2008

Boo!!!! World's Scariest Stock: Citigroup

Bat got your tongue?

What scares me about Citigroup (NYSE: C)?

Let's start with the obvious ... it's a bank.

I could probably stop there and gain the agreement of most investors, but I'll try to elaborate.

The beginning of the end

To understand the magnitude of Citi's woes, we have to go back to the late '90s. The repeal of the Glass-Steagall act -- a depression-era law designed to protect investors -- paved the way for Citicorp to merge with Travelers Group, forming what we now know as Citigroup ... the granddaddy of "supermarket" banks.

The idea seemed brilliant at the time: Slap every financial product you can think of together, forming a do-it-all behemoth where average Joes could deposit their paychecks, insure their car, and plan for retirement, while investment mavens could structure CDOs, form IPOs, peddle ARSs, and advise CEOs on mergers and acquisitions, all under one roof.

For about a decade, it worked beautifully. Shares tripled from 1997 to 2007, buoyed by juicy dividends. At one point, Citigroup even held the glamorous title of "world's largest company," a colossal giant home to trillions in assets and tens of billions in profits that could do no wrong.

And then the house of cards crumbled.

One heckuva Frankenstein

For entire article click here

Thanks Michael Ruppert for this lead - Johnny

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