Meredith Whitney on CitiGroup (NYSE:C) -- Read if you've got shares in Citi
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*****Whitney Speaks Again

*****Market Trends

*****Rant of the Year


Fellow Investor,  

More depressing forecasts for the big banks from the best big bank analyst out there, Meredith Whitney. You may recall it was Whitney who forecast the dividend cut at Citigroup (NYSE:C) back in October 2007. That was three months before Citigroup actually cut its dividend. Whitney should also be credited as one of the few analysts to see the financial meltdown coming. 

She still doesn't like Citigroup and would be a seller at current levels.  

In an interview on CNBC yesterday she said, "Most of the big banks would be lucky to break even or earn a little bit of money this year. I don't think any of the banks that I cover will continue to pay their existing dividends."  

*****Mutual fund giant picked a bad time to double down on Citigroup. Apparently a few different fund managers thought it would be a good idea to add 104 million shares of Citigroup at a roughly average price of $10 and change a share. Bloomberg reports that Fidelity is down $874 million on this round of purchases.  

Throw in previous holdings and the losses are well over a billion.  

If you've ever heard the expression "Don't try to catch a falling knife," this is what it means. I don't think it's so much about trying to bottom fish for quality stocks. I think it's more about assuming that one knows more than the market.  

There are always clues and hints in the stock market... Sometimes they're subtle (like Meredith Whitney predicting a dividend cut), sometimes they're obvious (like Citigroup actually cutting its dividend). It's the investor who seeks to derive meaning from the signs (as opposed to imposing meaning on the signs) that has the most success.  

*****One thing that never ceases to surprise me is how long it takes for trends to manifest in the consciousness of investors. The government is selling Treasuries like there's no tomorrow. Next week, a record $94 billion in short- and medium-term notes hit the block. The old record, $78 billion, was set just a month ago.  

There can be no doubt that this is ultimately inflationary. And we got a taste of that from a larger-than-expected jump in the producer-price index Thursday morning. Eventually, investors will demand higher yields for Treasuries, which will really light a fire under inflation.  

But despite that, long bonds still trade near record prices. I tell you, I feel better about my short Treasury bond position in my Recovery Portfolio every day. 

*****Two more things, and I'm done for the week. First, last night's video conference went really well. My analyst Jason Cimpl gave out a stock that you shouldn't miss. It's a healthcare tech stock that's got nearly 25% of its market and growing. 

There's a replay online HERE if you missed it. 

Finally, in case you missed it, here's a LINK to the phenomenal video clip from CNBC's Rick Santelli that everyone's talking about today. He's got a great solution for stimulus spending. This is something we'll discuss for sure. Email your comments to

Have a great weekend.

Best regards,

Ian Wyatt
Daily Profit

P.S. Just breaking: Gold broke $1,000 today. I was going to wait until Monday to share my new Gold Rush report with 5 great stocks in the gold mining sector, but this thing is too hot, so please see this link for more information on which gold stocks to buy.

Posted 02-20-2009 4:28 PM by Ian Wyatt


Me XMan wrote re: Meredith Whitney on CitiGroup (NYSE:C) -- Read if you've got shares in Citi
on 02-21-2009 7:49 PM

Rick Santelli is great guy I follow.

Tell like it is Rick!

Ian Wyatt wrote re: Meredith Whitney on CitiGroup (NYSE:C) -- Read if you've got shares in Citi
on 02-25-2009 8:47 AM

Me XMan, thanks for the great comment. I really do believe that Santelli has tapped into an undercurrent of American sentiment right now and although drastic and decisive action is required to fix the US economy, the President and our elected officials would be well-advised to take that sentiment into consideration and let the American people know they understand it.