I've sold my Citigroup stock (C). Big whoop, you say, the financial crisis has been all over the news for months? Well here are my thoughts on the matter: I think it's best not to invest in financial stocks at any time, because the CEOs get paid for short-term results while the shareholders are left holding the bag for long-term losses. Citigroup and Merrill Lynch CEOs walked away with a bundle during the go-go years just past, leaving their companies loaded with bad debts. Surely these financial experts knew very well that all those subprime loans were going down, but it didn't matter - they just needed a few quarters of paper profits to pocket millions in bonuses.
The big problem with financial stocks is that they make their money borrowing short-term and lending long-term, and for this to work requires a conservative approach. Whereas maximizing the CEOs bonus requires a speculative approach. This fundamental disconnect makes the stocks a bad bet.