BHP – bottoms are tough!

BHP BILLITON LIMITEDM

Every one is interested in BHP and whether we are in an opportunity phase or heading for more of the slippery slide down. BHP has slid the scales of disaster in recent years to levels we though not possible (the stock market does that) and fear now paralyses the potential buyers who would have bought with their ‘ears pinned back’ if BHP ever got to $15.00 just a year or two ago.

BHP hit a low of $14.00 as the dividend ‘slash’ expectation drove prices down and when the reality hit yesterday the stock rallied and everyone said jolly good job capital management should be foremost and that’s the end of it. Today to the surprise of many of these hopefuls the stock drops $1.00. Eh!

Let’s take a view of perspective. BHP is a big, big company on the global stage. The adjusted high has been $45.00 over the last ten years and the low $14.00. We are now at the low end of that scale at $17.63 right now. The dividend policy has been wisely changed and BHP having cleared that slate is clear to move forward and rebuild. The three major commodities it depends on for revenue are iron ore, oil and copper, which are all sagging badly and are also near the bottom of the cycle. Not at, but near, a clear distinction as the BHP share price also is – near the bottom.

The somersaulting share price over recent weeks and days is typical of changeable sentiment at lows of a cycle. Fear turns to hope which is quickly shattered again and again and on goes this cycle for a period which is quite normal.

Detach your mindset from the somersaults and take a view of perspective on what is a great company being offered at a very cheap price. We will wake up in a couple of years and go wow what a ‘gimme’ that was – somewhere around $15.00. It might be $10, it may be we have already seen the low at $14.00, who’s to know. The rally to nearly $18.00 is a part of the process as are the ensuing disappointments as we see today. Don’t be disheartened and take the longer-term view of perspective. What alternative do we have? Unless YOU have a crystal ball!

As to the shorter term ‘trigger’ for a rally we’ll have to wait and see but Stockradar is ready to pounce when the time is right.