Online Stock Trading

I never consider buying into banks. They’re always just too safe. They’re always just so “been there done that.” Perhaps were I older, or more risk averse, or retired or something, would I consider them. But I’m none of these. The problem for me has always been that banks just really don’t do that much. In short they’re too easy. The advantage they have over other stocks I do consider is that they are generally very safe as far as equities go. But that safety comes at a cost. It’s a cost I don’t want to pay, and besides, I have an iron stomach; the risk just doesn’t gnaw at me. The only reason I would ever buy a bank would be if that low risk assumption was followed by greater potential for reward. In other words, if the stock market was being irrational. Remember, low risk is supposed to be rewarded in tandem. When things go backwards, I start to get excited. The only problem is that in order for these things to happen, someone has to be naughty. Some banker out there has to make some serious mistakes. Whether or not those mistakes are valued correctly will be the crutch upon which a decision to snap up some shares is founded.

So who’s been caught with their pants down? Who’s been naughty? Citigroup (C) of course. Naughty yes. That naughty? I have my doubts. If we look back to the days prior to all these credit concerns, say, early June, this stock was trading at over $54 a share, had a trailing P/E ratio of 13, and was still expecting quarterly revenue growth to exceed 10% year-over-year. 177 days later and almost 44% lower, their P/E ratio has actually improved (in that it fell by only 36%) but damned near every other metric looks pretty bad. Or do they? If this were anything other than a Citigroup, I would say things don’t look so hot. But I think we need to be realistic here. Buying great companies at gunpoint prices almost always happens when you can’t know with certainty that they’re great companies. We always find out later. Once they’re expensive.

Keeping in mind the degree to which a Citigroup has long since proved itself a master at its game makes its current share price almost laughable. Or better, rather buyable. For the curious readers, I’m going to add something I haven’t done before: an outright prediction. I predict that this individual stock will significantly outperform the market by at least a factor of 3 to 1, for at least the next year. In the next few days I’ll add a graph to this post that will update to the stock’s new daily price so we can come back to check up on it.

Ok, I’ve added it now (it should update daily to reflect new prices–if it does not, try refreshing the page):