The Citi Case Study Has Led To The Death Of Buy-And-Hold Investing

Sex and the City was a very popular television and movie comedy-drama. Washington and the Citi (C), on the other hand, has been a drama totally devoid of comedy or sex. Call it nationalization or call it a public-private partnership, but traders walked out of the theater this week. They had wanted to see Citi fail.

Citigroup shares have now plummeted all the way to $1.50. Oh, how the mighty have fallen. As recently as April 2008, there was a high of $29.89 and as much as $56.28 in 2007 when Citi was the largest financial services company in the world. But C is now down -$55/share on 5.5 billion shares, losing roughly -97.7% of market value, causing the single biggest loss of wealth in world history. And if it wasn’t for the US government (ie, taxpayer) stepping in, there might even be a movie called the Lost Citi - or as some of us would like to have the script written, the Last Citi.
http://www.valueline.com/dow30/f9055.pdf

To watch Citi self-destruct in only about 16 months has been stunning. All through this drama, management tried to make it appear they were in control, and their investments in real-estate mortgage-backed securities would pay off, while others claimed the destruction was due to short-sellers. They all lied. Greed made them do it.

The Citi case study, however, has an upside; it has led to the death of buy-and-hold investing, which is ultimately a good thing in that the public can now see that vested interests of a relatively small group of Wall Street connected insiders, acting without full transparency, some might say deceptively, can be ripped apart by free market patriots from Main Street.

Moreover, regulators in Washington have now been shown that the one-stop shop marketing concept was really a ruse for management control by a small group who used their added power over shareholders to greedily pay themselves billions of dollars in annual bonuses.

Greed; it’s all around us, and in truth we need it, but clearly not too much.

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