Well, I'm definitely not a professional investor (and I'm still trying to break even from last year's debacle, but expect to break even by December if this market continues), but here is what I've been thinking.
When most stocks conduct a R/S (penny stocks come to mind, because they dilute the heck out of shares, selling into any strength and then conduct a R/S to "get rid" of the dilution, which results in another huge downturn for investors....then they repeat the dilution and continue the cycle...this is what penny scams do though, not usually done by Fortune 500 companies or the largest bank in the world), yes, it's an AWFUL time to get in and most investors pre-R/S get hosed. However, Citi (C, not Citi Holdings) IS the only truly international bank and they have finally figured out what to do with the government's 34% stake. That is what I find positive...that there is no question as to how they will get out from under Uncle Sam's thumb...they will convert all those preferred shares into common. Now, the dilution will result in something like 20+ billion shares, from one article I read (my first understanding of this was a doubling of the shares, but another reputable article posted 20-plus billion by the time it is over and done with). The company has discussed a R/S in the future, which of course would "get rid" of their dilution problem in a cheap and dirty way. If this bank were anything but the premier international bank I'd run away, but many analysts are changing their opinions about it and stating that Citi now has a solid foundation to move forward. All the uncertainties about their operations have been resolved...now they can get back to making money...you know, what banks are really supposed to do instead of taking handouts from taxpayers and testifying on capitol hill? :-)
Now, the rate of conversion is my next question. If it is done gradually, which would be in everyone's best interest, the share price may not be affected as severely. If they dump 20-plus billion shares at once or within a small time frame, look out below and forget about your investment for a year or so...seriously...we could retest our March low of under a dollar if that happens.
But, I don't think they will be that foolish. Confidence is everything in the banking and financial systems, and that would erode confidence at a time we need it most. Also, if the taxpayer wants a maximum return on their "investment" (which IMHO was an investment at the end of a proverbial gun-barrel), our government goons (I mean public servants, lol) would do well to wait and let the pps recover before dumping billions of shares and driving the price down to penny-stock levels (of which I would buy more at that time :-)).
So, would I put Citi in my portfolio as a speculative financial stock? Yes, I would and did. Would I put the entire thing into Citi? Heck no. I missed BAC at $2.53 and regretted it ever since...I thought about buying at that time but everyone was in fear of nationalization and they had good reason to be fearful of it. Washington Mutual, Bear Stearns, and many others went under and were never seen again, and there was no way of predicting which bank would be bailed out and which ones would fail. We also had no way of knowing what the results of a bailout would be...would they simply become "zombie" banks? We just didn't know. However, NOW we know what the process entails and that the U.S. doesn't want to stay in the banking business forever (or so they say). Citi is, IMHO, the last chance to get in a large and eventually profitable bank at a basement price. The pps may very well go down over the next year, and they're still losing money, but that is about to change. Sorry to be so long-winded, but you asked for my opinion and I'm tellin you. Best wishes on your investment, and hopefully we'll be reaping rewards in the years to come. I want to retire early and have a second home in Belize (or a primary one if the U.S. keeps going downhill, :-()
Market Data 
Markets 
