This blog post originally appeared on RealMoney Silver on Jan. 15 at 7:40 a.m. EST.

"I'm glad they didn't go down in vain."

--Walt Deemer, technical analyst for The Putnam Management Company (1975)

There were few surprises in the series of Citigroup ( C) announcements this morning.

The dividend cut was expected by this observer:

"Citigroup halves its dividend, and the shares briefly trade in the mid-20s. Asset sales and writedowns leave the bank crippled, and, in late 2008 (after another capital infusion by Abu Dhabi), Citi is merged with Bank of America ( BAC). Its new name is its old name, CitiBank!"

-- Doug Kass, Jan. 2, 2008, "20 Surprises for 2008"

Cramer: Expect More Doom at Citi

The capital infusion was also expected in this quarter:

"This isn't my Gnome, but a low-level source of mine is referencing a possible $15 billion capital infusion at Citigroup to be announced as early as today."

-- Doug Kass, Jan.11, 2008, RealMoney Columnist Conversation

Back in the mid-1970s, I was working for Larry Lasser (director of research) and The Chief (who ran the aggressive funds) at Putnam Management Company in Boston. Larry and The Chief were tough to work for, but never in my career did I learn so much as under their tutelage. And I will forever be grateful for that.

At that time, Walt Deemer was the technical analyst at Putnam. He was deeply respected, having learned his craft from the best there ever was: Bob Farrell at Merrill Lynch ( MER).

In 1975, General Motors ( GM) cut its dividend, and two of Putnam's portfolio managers, in total panic, wanted to sell the stock. In fact, they were apoplectic after the announcement. Walt, a man of dry wit and strong technical moorings, remarked in the halls of Putnam that morning (repeatedly so all could hear), "I'm glad General Motors stock didn't go down in vain."

Walt turned out to be very right on General Motors' shares. (He usually turned out right!) After the dividend cut, the shares subsequently doubled in 1975 and added another 47% in 1976.

GM 45-Year (NYSE)
General Motors

Click chart for larger image.
Source: Yahoo! Finance

Walt's comments are applicable to today's market in general and to the financials market in particular. They are especially applicable to Citigroup today.

I corresponded, through email, with Walt yesterday, who expressed that he couldn't recall so much "widespread gloominess," citing articles in The New York Times, The Wall Street Journal and, perhaps most revealing, the 2008 Barron's Roundtable over the weekend. He stated that it was too bad that investors didn't respond to today's concerns three months ago and before the financial, retail and housing ETFs dropped by a third. (Amen, Walt! We did alert investors on The Edge, my daily trading diary on RealMoney Silver.)

Walt is a realist -- he always has been -- and doesn't see instant gratification. But Walt, like myself, sees some light at the end of the market's dark tunnel.

Mr. Market is the ultimate discounting mechanism. By the time the news is out, it is likely well on its way to being priced into share prices.

And, oh yes, there was another classic Walt Deemer quote from the 1970s that has relevance to the market today and that I have never forgotten.
"When the time comes to buy, you won't want to."

-- Walt Deemer (sometime in the 1970s)
Yesterday, I documented the logic surrounding my suggestion that the financials -- via the Financial Select Sector SPDR ( XLF) -- finally had value.

Buy Citigroup today, and put the shares away in a drawer for a year or two.
At time of publication, Kass and/or his funds were long the Financial Select Sector SPDR, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.

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