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Here Is Your Christmas Present

 
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Old 12-18-2009, 05:52 PM   #1
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Here Is Your Christmas Present


So last year I posted on here about a good stock to purchase. It was Ford. Here are a couple of posts in regard to it.


Any good stocks to buy?

Anybody buying Ford?

I bought Ford Stock from a range of $5.00 all the way down to $1.25

It's now almost at $10.00 a share and it's only going to keep going as the economic recovery continues. The big play on Ford was that #1 it was a traditional cyclical stock - in that during a recession cyclical stocks fall and come back again with the recover, the big whammy that made Ford such a huge return on investment was that during this recession we had the crazy automobile bailouts, the automakers almost going out of business, so Ford's share price was pummelled ridiculously down for no good reasons and those who bought during the bottom have made out very well. $20 a share is not out of reason for this company to hit in the next couple of years.

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Old 12-18-2009, 06:06 PM   #2
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Re: Here Is Your Christmas Present


So maybe you didn't do anything, maybe you sat back, not sure. No problem, I can't make you take advantage, all I can do is give you the chance. Here is your Christmas present from me for this year.

Citigroup Inc (Citibank)

I have been accumilating a postion in Citigroup for the last month or so. There is a tremendous buying opportunity here with a huge upside. All the financials got beat down because of the recession, the credit melt down, ect...

They all got Tarp money and bailed out from the government in some degree. They have all been slowly getting back on their feet and paying off the Tarp money. Citigroup just raised the capital it needs to pay back their Tarp money this week. Here is a nice little story about them pointing out the buying opportunity that exists right now for those who can take advantage of it.

Quote:
By Matthias Rieker

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--You would think that repaying government aid, boosting capital and achieving higher quarterly profits would lift a bank's stock price.

Not for Citigroup Inc. (C). Like Lucy Van Pelt playing football with Charlie Brown, Wall Street pulls the ball away every time Citi tries to kick it.

Case in point: Citi's stock, trading at more than $4 only two weeks ago, fell sharply when the bank said it would repay its Troubled Asset Relief Program government funds--though it was exactly what many investors said they wanted Citi to do. The stocks of Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC) fared considerably better after their TARP-exit announcements. Citi's stock has fallen almost 19% after it said it would repay TARP, to $3.20.

Earlier this year, Citi boosted its equity capital by converting government-owned preferred shares into common stock. Again, the market didn't react well, sending the shares down right after the announcement of the plan and eventually pushing them below $1 a share.

One reason nothing seems to work is that Citi is essentially starting off as a new company now that Chief Executive Vikram Pandit has redefined the bank's strategy, said Jason Goldberg, an analyst with Barclays Capital. Institutional investors, such as mutual-fund and pension-fund managers, want to see sustainable profits at this new Citi, and that requires patience; unfortunately, their "patience has run out a long time ago," Goldberg said.

To be sure, Citi managed to complete the largest equity offering in U.S. history on Wednesday. And, after all was said and done, Citi's measures to shore up equity capital and exit TARP--along with improved sentiment for banks--will boost the company's stock-market capitalization to about $90 billion after settlement of the equity offering, from a low of about $15 billion in March. When you consider that Citi's shares outstanding quintupled over the last 12 months, a rise in the stock price is tough to achieve.

There is little hope that the ceiling over Citi's stock price will disappear before the government sells it 34% stake in the company, which it now plans to do within the next 12 months. Citi might argue that a temporary slide in the stock price is worth getting out from the burden of owing the government.

Citi's stock has recovered since falling below $1 earlier this year, but the stock seems unable to stay above $5. Citi's book value, in comparison, is $6.15 a share. The shares are down 60% over the last 12 months, more than those of any other big bank. Bank of America's stock, in contrast, is up 1.6% in that period.

For now, Citi has a solid foundation of capital, and it has strong reserves against future loan losses. But the Citi story remains a tough one to sell.

The capital raise by Wells Fargo was likely "done before it was even announced" because Wells Fargo's investment bank, Goldman Sachs Group Inc. (GS), probably had big fund managers already lined up to buy, analyst Goldberg said.

That roster of big investors on speed dial is what Citi needs to get. Goldberg, who rates Citi's shares "outperform," said investor clients rarely complain about Citi.

"But," he says, "people don't take the time to learn the story."

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; matthias.rieker@dowjones.com
I don't see citigroup doing anything but going up over the next year or two. As the recession ends all it takes is profits and earnings and like Ford, Citigroup should climb steadily.

Here is your 2010 Christmas present. Do with it what you want. If you have questions about how to buy stock or how to get started let me know. I've been buying stocks for almost 25 years. It doesn't take that much money to get started and the Internet has made it very simple to set up an account and get started. If I can help some of you I will do what I can.

Best of luck. Citigroups stock symbol is C.

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Old 12-18-2009, 06:10 PM   #3
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Re: Here Is Your Christmas Present


i bought ford mid november last year at buck eighty....still have it...i bought for a different reason though than most. i put my money into the company that didn't go sucking on the government trough. i hope gm/chrysler take a dump
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Old 12-18-2009, 06:13 PM   #4
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Re: Here Is Your Christmas Present


Mike, I looked at it and rejected it. I want a lower price before I pull the trigger.
Gov owns too much of the stock and it was lucky for them that the gov pulled back from selling some right now.

I think it will go up, but might wait a few weeks.

Good call on Ford.
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Old 12-18-2009, 06:20 PM   #5
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Re: Here Is Your Christmas Present


Quote:
Originally Posted by Framer53 View Post
Mike, I looked at it and rejected it. I want a lower price before I pull the trigger.
Gov owns too much of the stock and it was lucky for them that the gov pulled back from selling some right now.

I think it will go up, but might wait a few weeks.

Good call on Ford.
Good thinking. My take on it is I can't time the market so if I believe what I believe I start buying it and keep buying it. The problem with waiting and waiting is you can be left at the station as the train pulls away. A different way to do it is to decide on a total financial commitment. Let's say $5000 to invest in the company. Once you have decided, you buy some right then. You buy 200 shares at $6.00. A week later it drops to $5.50. You buy another 200 shares. A week later it drops to $5.00 you buy another 400 shares... a week later it goes up to $6.00 you buy another 200... a week later it drops to $4.50 you buy another $400 shares... it finally drops like your thought it might, you go all in with the rest and buy 1000 shares at $3.00.

In this way you average your purchases to maybe $5.00 a share. But you are invested. Waiting and waiting means you might miss that bottom and never get in as you see the price keep going up and you keep waiting for it to come back.

If you believe the long term trend will be higher, it doesn't really matter if you time it at the absolute bottom or not.

(Also remember the real bottom was 8 months ago you could have bought it for under $2.00 a share) So it doesn't really matter. The only thing that matters is getting invested.
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Old 12-18-2009, 07:14 PM   #6
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Re: Here Is Your Christmas Present


Quote:
Originally Posted by Mike Finley View Post
Good thinking. My take on it is I can't time the market so if I believe what I believe I start buying it and keep buying it. The problem with waiting and waiting is you can be left at the station as the train pulls away. A different way to do it is to decide on a total financial commitment. Let's say $5000 to invest in the company. Once you have decided, you buy some right then. You buy 200 shares at $6.00. A week later it drops to $5.50. You buy another 200 shares. A week later it drops to $5.00 you buy another 400 shares... a week later it goes up to $6.00 you buy another 200... a week later it drops to $4.50 you buy another $400 shares... it finally drops like your thought it might, you go all in with the rest and buy 1000 shares at $3.00.

In this way you average your purchases to maybe $5.00 a share. But you are invested. Waiting and waiting means you might miss that bottom and never get in as you see the price keep going up and you keep waiting for it to come back.

If you believe the long term trend will be higher, it doesn't really matter if you time it at the absolute bottom or not.

(Also remember the real bottom was 8 months ago you could have bought it for under $2.00 a share) So it doesn't really matter. The only thing that matters is getting invested.

Had some at that time, sold when it went to almost 4. Been looking to go back in, but thought I might wait for a few weeks befor the plunge.

Doller cost averaging is what you are talking about, I either take the plunge or don't.
Good luck, it seems the market isn't giving it much of a chance right now.

Last edited by Framer53; 12-18-2009 at 07:15 PM. Reason: spelling
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Old 12-18-2009, 10:12 PM   #7
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Re: Here Is Your Christmas Present


Citi raised the capital to pay back the TARP by issuing more stock, diluting the share price, and saying F U to the shareholders. The only reason they did this is because they didn't want the government limiting the amount the officers and managers could pay themselves in bonuses.

Citi announced Thursday that they were going to suspend forclosures for 30 days on people that hold mortgages with them. The reason that they give is "that they hope with this suspension that they can make the holidays a little less stressful for our customers who are going through a very difficult time". What they should be saying is, "We are doing this so that we can avoid having to recognize the losses on homes that are deeply underwater, thereby cooking our books until the quarter is reported so we don't have to declare insolvency."

And there's this:

Quote:
Dec. 15 (Bloomberg) -- Citigroup reported that an arbitration claim was filed against it today in New York by the Abu Dhabi Investment Authority, which purchased equity units from the company in November 2007. The units obligate the authority to purchase a total of $7.5 billion of common equity on specified dates in 2010 and 2011. The arbitration claim alleges fraudulent misrepresentations in connection with the sale and seeks rescission of the investment agreement or damages in excess of $4 billion
.

Yikes. That's going to end up hurting them, I would think.

They've also decided arbitrarily to jack rates on millions of Citi credit card holders to 29.99%, for no other reason than to try to squeeze a little dough out of people ahead of the credit card reform bill making it's way through Congress. I'm reading stories all over the place of people cancelling their cards, and worse, maxing them out with the intention of defaulting on them. That's not going to be good for their bottom line.

I've got some $3 Jan. put options on this pig. They ain't going to last another 6 months. No way. Think they're going to get bailed out again? Nope. The government couldn't sell enough paper to do it. They're killing themselves by getting out of TARP this early.

Merry X-mas, bastards.
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Old 12-18-2009, 10:52 PM   #8
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Re: Here Is Your Christmas Present


you still trying to hawk citibank. Give it a rest. Yeah if you bought it nov 08 you made money on it. Other than that if has done nothing this year.
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Old 12-19-2009, 08:45 AM   #9
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Re: Here Is Your Christmas Present


Seriously, of all the things that one could be invested in, why on earth would one want to speculate on financial stocks right now? You can't even see their balance sheets. Not to mention all of the trillions of potential losses in "off balance sheet" garbage that they hold. They're trying to play "extend and pretend" by changing the mark to market rules. You have mortgage backed securities backed by mortgages that haven't had a single payment made on them in over a year, but they can report them as money good. Do they really think that all of the sudden these mortgages are going to be made good again? Why would they? The people in the houses are long gone. Who's going to buy a house for $300k when it's now worth $120k? And we haven't even started to see the problems in the commercial real estate materialize yet. These guys are dreaming.


And "dollar cost averaging" is for noobs and suckers. Learn how to do some very basic technical analysis for Pete's sake. Learn how to draw a trend line. Wait until it's clear that the trend is upwards, and then buy on the dips.
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Old 12-19-2009, 09:07 AM   #10
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Re: Here Is Your Christmas Present


though I agree with you ahren, you miss some important points.

Banks, Spread, Leverage, Shadow Inventory, Business Lending

Spread:
Spread is the difference between cost of funds and earnings from lending those funds. Currently banks may borrow from the Federal Reserve at .1% (one tenth of one percent) then loan those funds to the Treasury (10 yr t-notes) at 3.6% for a spread of about 3.5%.

Leverage:
Leverage is the ratio of equity to borrowed money. Curently banks are allowed 20X leverage, Bank Holding Companies (Goldman) 40X.

Earnings:
The spread, minus the costs of doing business.

Banks can borrow 20X their net worth from the Fed then lend that right back to the Treasury at 3.5%, annual interest spread, which produces a total annual return of 82% of net worth in one year when compounded semi annually. This return will double in value in about 15 months. This is a risk-free loan with virtually no associated costs. (Banks should be thanking the US taxpayer for this largess).

Shadow Inventory:

When a bank recognizes a loss is a really big deal. Assume the bank holds a $1,000,000 mortgage with an actual value after costs and markdown of $500,000. At the time the bank marks down the value, the banks total net worth is reduced by the $500,000 loss. This also eliminates the allowed leverage on that money.

If the bank holds that loss unrecognized for 15 months, the earnings from the leveraged spread on treasuries fully covers the banks loss. If the bank failed to recognize the loss for 30 months, it would show additional earnings equal to the entire mortgage amount.

Banks make money by not recognizing losses. In order to do this, the cannot sell the house.
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Old 12-19-2009, 10:59 AM   #11
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Re: Here Is Your Christmas Present


If you don't have any interest in it then skip this post or start your own. This is about helping contractors get a leg up, getting ahead and learning something that they might have always thought was out of their reach or only something that 'rich' people could do. It's not about trying to boost your personal egos. It's about helping out our fellow tradesman who have a desire to invest for their futures.
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Old 12-19-2009, 12:30 PM   #12
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Re: Here Is Your Christmas Present


Quote:
Originally Posted by Mike Finley View Post
If you don't have any interest in it then skip this post or start your own. This is about helping contractors get a leg up, getting ahead and learning something that they might have always thought was out of their reach or only something that 'rich' people could do. It's not about trying to boost your personal egos. It's about helping out our fellow tradesman who have a desire to invest for their futures.
I do have an interest. I have C puts.

Who's trying to boost egos? I'm trying to help people preserve their capital by not following you over the cliff on this one. As far as stocks go, there's about a billion other places to park your money, other than wildly speculating in penny stocks.

Thom, I understand all that, but it's still not enough to cover their losses. The total in derivatives that they hold is greater then the GDP of the entire world. There's no bailing out of that.
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Old 12-19-2009, 12:43 PM   #13
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Re: Here Is Your Christmas Present


Then start your thread.

Other than that what you are doing is nothing more than a continuation of trying to drag the politics and religion forum into this thread. Nothing more than that. You know it I know it, Justaframer knows it.

Instead of continuing with your negativism barely hidden in your veiled "I'm trying to protect somebody" why don't you actually do so by starting a thread that gives somebody a choice in what to do instead of what not to do? Move in a positive direction instead of a negative one.

I can answer it for you - because that's not what you're about. You're about tearing down instead of building up. My record speaks for itself. As does yours.

Do we now have to allow you to derail another thread by taking it to a you show me yours I'll show you mine? Or could you have instead just presented another great option for our fellow contractors to profit from?
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Old 12-19-2009, 12:46 PM   #14
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Re: Here Is Your Christmas Present


Quote:
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I do have an interest. I have C puts.

Who's trying to boost egos? I'm trying to help people preserve their capital by not following you over the cliff on this one. As far as stocks go, there's about a billion other places to park your money, other than wildly speculating in penny stocks.

Thom, I understand all that, but it's still not enough to cover their losses. The total in derivatives that they hold is greater then the GDP of the entire world. There's no bailing out of that.

And you are saying there is no value in the derivatives???

Mark to market is an accounting gimmic that never should have been in place. It was started towards the beginning of GWB term and at the time we were warned by Europe that this could bite us, which it did.

One of the large reasons that banks had a problem was the fact there was no market for the derivitives they held. This made the banks have to completely write off these assets, even as they were recieving payments from them.
In order for a loan to be on the books, there has to be a market to sell it at par or it must be written off.

See the problem? No market, write it off. This made losses by banks much larger than they actually were.
By eliminating or suspending this law, not sure which they did, it allowed banks to keep assets on the books that this law had previously excluded.

I have not seen anything about the quantity of derivatives that C holds, wopld like a reference please.
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Old 12-19-2009, 02:13 PM   #15
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Re: Here Is Your Christmas Present


Quote:
Originally Posted by Framer53 View Post
.

I have not seen anything about the quantity of derivatives that C holds, wopld like a reference please.

Citi spit up last year one is the banking side the other is a holding to deal with the derivatives. Citi bank sucks and should be avoided. The stock is propped up and won't go over 4 dollars anytime soon.
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Old 12-19-2009, 04:19 PM   #16
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Re: Here Is Your Christmas Present


Quote:
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And you are saying there is no value in the derivatives???

Mark to market is an accounting gimmic that never should have been in place. It was started towards the beginning of GWB term and at the time we were warned by Europe that this could bite us, which it did.

One of the large reasons that banks had a problem was the fact there was no market for the derivitives they held. This made the banks have to completely write off these assets, even as they were recieving payments from them.
In order for a loan to be on the books, there has to be a market to sell it at par or it must be written off.

See the problem? No market, write it off. This made losses by banks much larger than they actually were.
By eliminating or suspending this law, not sure which they did, it allowed banks to keep assets on the books that this law had previously excluded.

I have not seen anything about the quantity of derivatives that C holds, wopld like a reference please.
Huh? A "gimmick"? Having the market put a value on your assets instead of just proclaiming that you feel that they're worth what ever the hell you want them to be is a good idea because.......?????? This is the basis of how the whole market operates. Bid/ask. That's how prices of everything are established. The reason there is no market for the derivatives is nobody wants to buy something that's worth 0. Do you want to buy a MBS from them where the person hasn't made a payment on the mortgage in over a year? I sure as hell don't. But let's just say that they're worth something, just because we don't want to have to be insolvent.

And yeah, let me invest my hard earned money into and institution which I have absolutely no idea about exactly how much of this garbage that's supposedly worth more than zero they have. Sounds like a winner. Where do I sign?

Quote:
Originally Posted by Mike Finley View Post
Then start your thread.

Other than that what you are doing is nothing more than a continuation of trying to drag the politics and religion forum into this thread. Nothing more than that. You know it I know it, Justaframer knows it.

Instead of continuing with your negativism barely hidden in your veiled "I'm trying to protect somebody" why don't you actually do so by starting a thread that gives somebody a choice in what to do instead of what not to do? Move in a positive direction instead of a negative one.

I can answer it for you - because that's not what you're about. You're about tearing down instead of building up. My record speaks for itself. As does yours.

Do we now have to allow you to derail another thread by taking it to a you show me yours I'll show you mine? Or could you have instead just presented another great option for our fellow contractors to profit from?
Who's derailing anything? You're trying to convince people that C is a good stock, solely based on the fact that you happened to catch a bottom on a completely unrelated company. I'm telling them that's hogwash, and giving them plenty of reasons why C is going kaput. This will be the third time in this thread in which I suggest a potentially very positive investment opportunity in buying put options on Citi.
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Old 12-19-2009, 04:34 PM   #17
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Re: Here Is Your Christmas Present


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You're trying to convince people that C is a good stock, solely based on the fact that you happened to catch a bottom on a completely unrelated company. I'm telling them that's hogwash, and giving them plenty of reasons why C is going kaput. This will be the third time in this thread in which I suggest a potentially very positive investment opportunity in buying put options on Citi.
Uh huh.

As always... we are going on 18 months now with Ahren's doom and gloom predictions with zero ever being right about anything yet.

I listen to the same thing from you since last Nov. Mean while every investment I've made that you've done the same song and dance of why it will be in the toilet has made money.

You've got just under 2 weeks for both your latest ones to come true.

Your : Dow @ 3000 by Q1 2010 and Citigroup to be BK by Q1 2010.

None of your gloomy apoliptical predictions have come true all year and you only weeks away from your last 2 being proved false.

Ahren's score still = zero.

Mike - still batting 1000.

I can't wait to revisit this thread in 6 months.

Last edited by Mike Finley; 12-19-2009 at 04:38 PM.
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Old 12-19-2009, 05:13 PM   #18
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Re: Here Is Your Christmas Present


Statically over 90% of all put options purchased expire out of the money (loss of investment) and naked puts (which we know these have to be cause you certainly aren't doing covered puts since we know you don't own any C stock, are statiscally even worse)

Now lets get to your Puts.

Let's here the details. You said you bought puts with a strike of $3.00 What's the exipiration date, Jan what? Which puts did you buy and how many?

So far all we have is a vagueness of you need citigroup to be under $3.00 a share by the end of January. Let's get the details out on the table.
What is the option symbol, when did you buy them and what was the premium. Or just make it real easy and give me the symbol.
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Old 12-20-2009, 10:23 PM   #19
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Re: Here Is Your Christmas Present


Crickets?

Anyways more good news about Citigroup

Quote:
The banks have been in the doldrums lately because of the need to repay TARP money. However, this problem will soon be remedied as Wells Fargo (WFC) is holding a $10.4 billion offering and Citigroup has a $17 billion equity offering to pay back TARP. Cramer prefers Citigroup's offering for the following reasons:
1) Wells Fargo, thanks to its purchase of Wachovia, has too much exposure to mortgages and therefore, a higher risk of foreclosures.
2) Citigroup is strong overseas and still garners significant respect abroad.
3) The government's 34% stake in Citigroup is a "non-issue," especially considering the fact that the stock trades at high volume.
4) Citigroup's stock price has dropped ahead of the equity offering, and the entry point could not be better.
5) At only $3.40, a Citigroup share is like a "lottery ticket" with better chances of winning. Cramer thinks Citigroup is "the ideal speculation play."
6) Cramer predicts Citigroup will triple in price in 3 years once it cleans up its debt and its book value increases. His motto for the stock is "$12 by the end of 2012."
Quote:
But now there are only two banks left that need to issue stock to get out from under TARP, Citigroup and Wells Fargo, which denies it has to. But give me a break…With this stock offering, you’re getting Citigroup in a price that is far more beaten down than it deserves to be. And you have to take advantage of the discount…I want you to buy, buy, buy Citigroup.”

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At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

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