Irrationality in the Financial Stocks?

Amidst the uncertainty, there are glimmers of rationality.

For Citibank, for instance, throw in a known amount of capital raising and a likely restructuring charge, and one can come up with a price that fits, rather tightly.

We now know that dilution due to capital raising is going to be $7.5B rather than the $6B in my estimate, or about 30-cents a share more.

We can guess at a $1.5 billion dollar "restructuring charge" in Q4, which is about 20-cents after-tax. (It's doubtful it will all be realized, I'd guess...).

Credit is more expensive, now, and this will cause a mark-to-market loss of some kind. This is really hard to estimate, because there may be offsetting amounts gains. What's more, if the price of credit is near its high, now, then some amount of these charges will reverse next year or so.

Baking all those in, one comes down to a book value of $21.12, which might equate to a stock price of $29.57, fairly conservatively put. Citibank closed at $29.76 yesterday ...

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