CITIGROUP

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Diary of share price movement.

• 04/08 There has been an evident domino effect amongst a range of share that have been chaotic for may years. Like drunkards staggering from bar to bar, each supporting the other, when one tumbles, they all fall down. Perhaps “ring around the rosy” is a more apt metaphor.

“Ring a ring a rosey
A pocketful of posies
ah-tishoo, ah-tishoo.
We all fall down.”

The business version of this would be

Ring around a share price
Rings around a share price
Chaos, chaos.
We all fall down

Citigroup shares floundered after analysts downgraded the company, citing a lack of capital and exposure to shaky credit pools and subprime mortgages. Citi was undercapitalized because it has spent $26 billion on acquisitions since 2006, while taking $6 billion in write-offs and raising its dividend, all without any significant increase in net income.

Citigroup (C) was undercapitalized according to some Wall Street analysts sounding fresh alarms about the banking giant's balance sheet. Citigroup shares tumbled, starting in 2007. Citigroup's tangible capital was 2.8% of assets, just over half the industry average of 5%. I cannot predict if the current adjustment has corrected the chaos. If the share price is dampened to below $35 in 2008, it should be stable. However, an large rates of increase will throw the share price into chaos again.