Having some sort of financial exposure is important because there can be growth when the interest rates and economy start to grow, but when the market slows, banks are typically quick to feel the effects. Comparing back to pre-recession levels, you can see that the stock has yet to recover and this could alarm investors because if another market slow down were to occur, they may be wondering if their investment would recover
Taking a look at the stock chart using the monthly time frame, you can see that the stock has increased since the initial fall off in 2008, but it is still climbing to the previous highs. The financial sector is once place where you should certainly compare the companies because some may provide better value. You should also watch for new regulations that could affect the way Citigroup conducts business as that can translate into expenses and hurt cash flow.
With a rising interest rate environment, banks should see a benefit to this because they can begin to charge a higher interest rate for lending money, which means they will return more overall. Also, people who store their funds in a money market account or in a interest savings account, they should begin to slowly see an increase on their interest revenue.
Be sure to keep in mind the risks of investing in the finance sector. One risk to keep in mind is that they are sensitive to the overall market conditions, more so than other sectors. Secondly, keep an eye on the global financial health because while the U.S. is doing well, a slowing Europe may affect our health indirectly. Lastly, make sure the health of the financial institution is well because you want the company to withstand a market slow down well, and not end up bankrupt.
Luckily there are many options within the financial space and you should take your time to get to know not only Citigroup, but others as well. If you want to get the exposure but eliminate the company specific risk, look at ETF products that cover this area. See how much risk you can handle and if your portfolio is ready for another addition. If you find yourself stuck, reach out to an investing professional and they can help to point you in the right direction.
|This story from Macroaxis reported on May 31, 2017 contributed to the next trading day price increase.The overall trading delta to the next closing price was 0.89% . The overall trading delta when the story was published to the current price is 17.57% .|