Citigroup Fails Inspection

For the second time in three years, the Fed tells Citigroup that it isn't up to par and can't increase its dividend or initiate share buybacks. How big of a black eye is this?

Mar 27, 2014 at 2:35PM

During the Fed's annual Comprehensive Capital Analysis and Review process, nicknamed CCAR, banks undergo careful scrutiny to determine how they would fare under the weight of another major financial crisis. The results of these tests determine whether banks will be allowed to raise dividends or initiate share buyback programs, and this year, the only big bank to fail was Citigroup (NYSE:C). This is the second time in three years it has failed.

The problem this year wasn't with Citigroup's liquidity. The bank's capital ratios fell well above the required benchmark. The problem was the bank's processes in place around its ability to forecast losses across all of the markets in which Citigroup operates. These processes domestically and internationally did not reach a level that the Fed decided was adequate.

But with shares as cheap as they are today, does this black eye make Citigroup a bank to stay away from, or is now a good time to buy? On today's Stock of the Day, Motley Fool analyst David Hanson says he's definitely not staying away. Despite Citigroup's troubles, it remains the cheapest of the big banks today, and it still trades at a discount to its tangible book value. David thinks this bank will definitely be in a better place five or 10 years down the road.

The biggest change you never saw coming
Do you hate your bank? If you're like most Americans, chances are good you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

David Hanson and Mark Reeth have no position in any stocks mentioned. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers