Citigroup? Disgusting!

Good morning,

I am disgusted with my stock holdings Citigroup. They are selling their shares at huge discount so that they can raise money to pay their executives higher compensations. Though I fully agree that any organization must pay the “enough” to attract the talents so that the firm can grow in the future, I am disgusted that the group is diluting its equity and shareholders’ wealth so that their executives can benefit from the freedom of compensation decisions. Do they really believe they can increase shareholder wealth or are they just plain greedy? Somehow it reminds me of what I learned in school, the topic of “manager entrenchment”. All these strengthen my belief in selecting stocks that are fundamentally sound and while operating incomes and balance sheets are important, it is more important to select companies with positive free cash flows.

It was an interesting read from the FOMC that the economy seems to be heading stronger towards full recovery and that the conditions allow for not having to increase interest rates sooner. Most investors are relieved that their expectations for earlier interest rates increment will not happen. However, despite of what the Fed said, with the economy full recovery in sight and the massive budget deficits of the US balance sheet, I am still holding on to my belief that the rates will increase in the second quarter next year.

I sincerely hope that my students have read my blog yesterday explaining the entering decisions. If they had, they would probably be making money and I am very sure that there would have recovered the seminar fees of $388. I was quite encouraged by their feedbacks and perhaps I may consider continuing the seminar while preparing to meet some potential to manage their money. I really want those who are planning to trade the US markets to understand the important areas to consider before plunging into the markets, and that’s the reason why I am charging so little for the seminar.

NOV gained 0.29% to close at $44.86 last night. It opened at $45.04 and the day’s high was $45.78. If the decision was made to buy at 0.3% above the previous night closing price and place limits at 10%, the trade should have made money. TDW gained 2.84% to close at $46.70 (the same decision for NOV should apply for this stock), DOX was up 0.88% to close at $27.46, NE gained 1.45% to close at $42.08 and FTI was up 1.54% to end the session at $46.78.

Have a great day today!

Francies Cheng
BBus MAppliedFinance