Is Investing in Citigroup (NYSE:C) a Fool’s Game at this Time?

While shares of Citigroup (NYSE:C) have had a nice upward swing lately, reaching its 2010 high of $3.81, and up by about 12 percent over the last several days, it seems a rather irrelevant event in my opinion, and nothing in the fundamentals justifies a big move up, other than the fact it’s prices so low that any temporary increase will make percentages pop for the company.

Part of this recent surge in share price for Citigroup has been attributed to the preferred shares they recently offered, which yielded a nice 8.875 percent over a 30-year period. These are being offered to pay back part of what they owe the TARP fund.

Although there is no correlation between preferred in common shares, some seem to think investors are making that connection anyhow, driving the shares up. I’m not sure that’s really true, but it’s possible.

At this time, the fundamentals of the company just can’t warrant any positive outlook over the next year or so for Citigroup, as it’s impossible to gauge their performance in any way, as there are too many variables to make predictability a part of the equation.

For example, some have said they believe Citigroup will become profitable sometime in 2010. The problem is this is predicated upon everything lining up correctly for them; like the economy really turning around and not continue on in the recession we continue to experience. That’s a big “if” to contend with. Even banks on much more solid moorings could be hammered again if things don’t turn around soon.

Some people have made a big deal about large hedge funds investing in Citigroup as well. But all of us know these are short term plays, and the low price of Citigroup, as shown over the last week, can also generate good returns for those in the market over the short term when the price of the stock temporarily goes up. To look at that as a nod toward Citigroup being on the road to recovery is dubious at best.

Taking into consideration credit losses at the company are project to increase and not decline, and it’ll still take a significant amount of time to wind down a number of the assets held at the bank holding company, and you can see anyone that thinks they have a clear view of where Citigroup is going is only deceiving themselves.

They’re a long way toward becoming a company which has a sustainable and predictable performance, and those investing in them need to know that.