The Write-Down Guessing Game

Banking, finance, and taxes

Published: January 14, 2008 5:37 am

CNBC reported that Citigroup (C) could have a $24 billion write-off. The source for that report is not clear.

Last week, Goldman Sachs said Citi might have to take a charge of $15 billion. That estimate came from three bank analysts. The last number that the bank gave out was $8 billion to $11 billion.

There have been similar dislocations in write-down estimates for Merrill Lynch (MER), Bear Stearns (BSC), Morgan Stanly (MS), and JP Morgan (JPM).

Keeping the press and analysts from guessing the size of write-offs is not possible. It brings analysts a day in the sun and it helps the press get eye-balls. But, it does not do investors any good as they are thrown from one set of numbers to another.

It is still no unusual for Citi’s shares to move 5% up or down in a day. It is too bad that analysts won’t wait for information from the company. The market could be efficient, but not when it is bounced around by rumors and speculation.

Douglas A. McIntyre

It’s Your Money, Your Future—Own It (sponsor)

Are you ahead, or behind on retirement? For families with more than $500,000 saved for retirement, finding a financial advisor who puts your interest first can be the difference, and today it’s easier than ever. SmartAsset’s free tool matches you with up to three fiduciary financial advisors who serve your area in minutes. Each advisor has been carefully vetted and must act in your best interests. Start your search now.

If you’ve saved and built a substantial nest egg for you and your family, don’t delay; get started right here and help your retirement dreams become a retirement reality.