Citigroup stock: 8-ball says future is cloudy

— -- A: Citigroup has become the latest sick patient in the banking industry.

Following a failed run at buying Wachovia, Citigroup has revealed how difficult its situation is. The company received billions of dollars in capital from the U.S. government's TARP program. Meanwhile, it sold 51% of its Smith Barney brokerage business to Morgan Stanley to raise still more capital.

The business continues to show signs of stress. The stock is down 47% just this year so far. And the company's losses continue to mount, prompting Citigroup to split itself into two companies .

Standard & Poor's stock analyst Stuart Plesser says in a report that he expects the company to take extreme steps, such as selling a third of its assets, to preserve itself. He also expects job cuts, credit losses and efforts to bolster its capital ratios.

These steps are adequate to keep Citigroup alive as an operating entity, Plesser says. He says the company's stress is reflected in the stock price, and therefore he rates it a hold.

That may be so. But given the downside risk, it's probably not an ideal holding for an individual investor at this point. There are too many uncertainties.

If you just can't resist, you might consider buying some of Citigroup's bonds. Even if stockholders' stakes are diluted, a bond position would be solid. But even with the bonds, you're betting that the government can and will do anything it can to stop the bank from failing.

This is all just too risky for most investors. It's probably best to let this one percolate a bit more, until you can better assess the situation.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.