roger maxims

Citi: A Sell at $3.00?

Stock price = discounted cash value of forward EPS

As at Dec 2008, Citi's stock price should fall between:

0.98 [2% inflation] x ZERO [2009 loss]
to
1.03 [3% deflation] x ZERO [2009 profit]

which gives a price range of absolute zero to positive zero.

Please don't tell me 3 years or 5 years later Citi will become profitable again. All banks profit on ever-increasing leverage, that's what mortgages and credit cards are all about.

Imagine what would happen if Citi reduces your mortgage by half and your credit card limit by a third now.

To stop the train is hard, to drag it in reverse when there's still coal in the boiler is suicide.

Dear Citigroup Customer...

I think the case is more clear cut than this:

If your interest rate is C, which is the sum of A and B, and the bank charges you more than C - you just take this to court for (1) breach of contract and (2) return of excess interest paid.

But I note that the 6.303% is an APR rate, which, depending on how often they compound the A and B above, may in fact equal C.

Also, just saying "it is very unlikely that it will go down" just means that Citi or the telephone lady personally predicts LIBOR to be going up soon. LIBOR is a fact that neither the customer nor the bank can influence alone.