David Sterman
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The investing herd can be quite curious. Investors tend to slowly react to major trends, and then get in a rush to embrace that trend because of timeliness

I've been thinking about the herd, and why it simply fails to respond to all of the major progress being made by Citigroup (NYSE: C), which remains my top financial services stock pick.

I added Citigroup to my $100,000 Real-Money Portfolio in early February and I boosted my position by 33% nearly two months ago.

Frankly, if this wasn't already such a big part of my portfolio, then I'd be adding more right now. 

I've been poring over Citi's second-quarter results and they underscore the point that I've been naming for a while: This bank is a lot healthier than it's very weak stock price might suggest. 

Blame it on the herd. It's still getting over the bank's recent troubled past. But one of these quarters, perhaps the next one or the one after that, Citigroup could deliver another solid quarter -- and the herd could finally jump on board.

Getting healthier
Investors need to track two issues with this stock. The first is the state of the bank's core operations ("Good Citi"). The second issue is how far along Citigroup is in the process of unwinding its exposure to the legacy parts of the business ("Bad Citi") it no longer wants. 

On both counts, the news is quite good -- especially in the context of a still-weak global economy

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David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com