Fidelity Investments Made Horrible Investment in Citigroup

Fidelity Investments is the world’s largest mutual-fund company. In the fourth quarter of 2008 Fidelity made an ill timed horrible investment in Citigroup Inc. which more than doubled its stake in the troubled giant bank. Citigroup stock has declined by 63 percent so far this year.

This investment by a seasoned manager with a famous mutual fund indicates just how dangerous to your financial health trying to bottom pick markets can be in a Long Crisis. No one alive has seen a worldwide financial crisis of this magnitude. Stocks that look like they may have reached the bottom, like a beat down Citigroup, may in fact be on their way to being worth a big zero.

Other stocks in the same boat with Citigroup are Bank of America, GM, and Chrysler. Should some disaster happen in the oil patch, say a terrorist attack on Saudi Arabian oil facilities, the resulting run up in crude oil prices would finish off the airline and international travel industries.

Oil stocks in companies with large reserves and strong balance sheets, and silver and gold mining stocks in companies with enough cash and reserves on hand to take advantage of rising precious metals prices, are in fact the only stocks that I presently feel deserve attention and investment during this continuing financial meltdown. Even beaten down high quality oil stocks, like Petrobras (PBR) may be pulled down further by deteriorating economic conditions.

It really is not wise to be bottom fishing in a Long Crisis environment. When a seasoned money manager loses within a few months almost one billion Dollars of investors money buying an already beaten down stock like Citigroup you should be aware that present meltdown conditions are probably going to create extreme investment situations and marked down stock evaluations that we can not at this time even imagine.