OK, let's make this a really easy stock lesson for you and why the market forces think President Obama's bank and housing plan is the wrong path for the USA. Before that, a little background on me. I spent 5 years as a Managing Director at a brokerage firm called Harrisdirect/CSFBdirect/DLJdirect. I obtained my Series 7 license and was well on my way to a Series 24 when E*trade acquired the company.
Citigroup traded yesterday between 98 cents and $1.11 and closed at $1.02. If you bought it at $1.02 that translated into a 2.70% dividend yield. On March 9 almost 1.9 billion shares were traded and on that day Citigroup lost $1 in share price or almost 40% in its value.
Why are those numbers important? Well you watch volume to see if the change in stock price is significant, So the market significantly thinks that the future potential of Citigroup is, umm horrible. But, wait a second. Isn't the administration propping up Citigroup with tax revenue to keep it afloat? Yes. Doesn't that mean Citigroup is too big to fail? Yes. And, doesn't that dividend yield help? A little.
What this means is that the stock market thinks that owning Citigroup, even when it is too big to fail and receiving money from we taxpayers, is not a worthy investment. And since Obama is feeding them money, the market believes that Obama's banking and housing plan IS NOT WORTH INVESTING IN. They believe that the future is bleak for a Government run business.
Should you watch the stock market day to day? Probably not. I can't because if you try to, you realize that sometimes it doesn't make a lot of sense. However, when a stock gets pounded like this and you know the Government has deemed it too big to fail (fail = stock price of $0) so you'd think there is little risk, but based on Obama's plan there is LITTLE UPSIDE FOR YOU in owning this stock.
Written another way, there is little UPSIDE IN OBAMA'S BANKING AND HOUSING PLAN. P.S. HT to @redstate. The stock market has dropped 20% since Obama took office, officially making this The Obama Bear Market. Hard to argue with those stats, Obama voters.