Why Citigroup Got Crushed This Week

As I write this, about midway through the final day of the trading week, Citigroup (NYSE: C  ) is down a whopping 4.34% for the week. The big banks got hammered overall, but no one else took it on the chin quite like Citi.

Tale of the tickers
Before we autopsy Citi's dreadful performance, let's have a quick look at how the superbank's peers and the markets did:

  • Bank of America is down 2.29%.
  • JPMorgan Chase is down 0.48%.
  • Wells Fargo is our winner of the week, down just 0.65%.

The markets have had a tough time of it as well, with the narrower Dow Jones Industrial Average down 0.40%, the broader S&P 500 down 1.32%, and the Nasdaq down 2.31%.

Foolish bottom line
Right off the bat, there's not a whole heck of a lot happening on the news front for Citi -- but it's always a good thing to check when a stock drops off a cliff the way Citi's did this week.

On Monday, Reuters reported that a federal judge said he would not "rubberstamp" the superbank's proposed settlement of a shareholder lawsuit alleging that Citi "hid tens of billions of dollars of toxic mortgage assets." If the settlement is overturned, it presumably means the suit could end up costing the bank more than the $590 million it was prepared to pay out, but this story isn't big enough to have caused the 4.4% drop all on its own.

What else, then? It was certainly a weird week for the four big banks overall. Everything was running relatively smoothly until Wednesday, when share prices for B of A, JPMorgan, Wells Fargo, and Citi took a nose dive. Again, there was nothing happening broadly that accounts for this pitch downwards.

With today's disappointing jobs numbers from the Department of Labor, however, expect the down markets and down banking sector to stay down. Everyone's looking for signs of economic recovery, and investors will not like hearing that the U.S. economy created only 88,000 new jobs for the month of March.

But before you let that admittedly pitiful number get you down, remember that this number is typically revised. And while that could be a revision upward or downwards, chances are it will be upward, as the ADP jobs report cited the creation of 158,000 private-sector jobs in March. 

Also remember that the markets move up and down with great caprice sometimes, and following your favorite stocks on a day-to-day basis can not only be misleading, it can be downright depressing.

Take the long view, Fools. Check in with your companies on a quarterly basis: Make sure their fundamentals remain sound, and that you still understand how they're making money, then go read a book, take your dog for a walk, or play with your kids.

Foolish investors know they're in it far into the future, and can therefore find peace among the inevitable gyrations of the markets.

Looking for in-depth analysis on Citi?
If so, look no further than our new premium report on the superbank. In it Matt Koppenheffer -- The Motley Fool's senior banking analyst -- will fill you in on both reasons to buy and reasons to sell Citigroup. He'll also clue you in on what areas investors need to watch going forward. For instant access to Matt's personal take on Citi, simply click here now.


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  • Report this Comment On April 05, 2013, at 6:29 PM, CUInHawaii wrote:

    Keep in mind that Citigroup is a far more international company than the other banks you compared it to. The difference between US and International economic speculation is likely to be one of the major reasons for a larger decline.

    I am actually a holder of C rather than other banks because it is both a value investment and an international investment. I consider it safer to invest in an US based international company, than in a foreign company.

    While I think it will be quite challenging for C to return to the glory days, I know this:

    Don't fall victim to one of the classic blunders. The most famous is 'Never get involved in a land war in Asia,' but only slightly less well known is this: 'Never underestimate a bankers ability to come up with new ways to profit from our money.'

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