Okay, I bought back into the BP stock again.
Why?
First, the stock went down 10% from where I cashed out. While 10% isn’t quite the percentage that I was hoping to buy back in at, I tried to gauge how far the stocks would go down. How did I do this, you might ask? I found something as close as possible to this disaster, and that was the Exxon’s “Valdez oil spill“. Exxon’s stock went down a little, but not much more than a few percentage point. What about the Exxon dividend? Was it affected…? Nope, Exxon continued to pay it out.
Second, sometimes a company or a person gets lucky. So far, nature has worked in BP’s favor. The winds are blowing in the right way, the waves have settled. More than just BP is participating in the cleanup, many other companies and countries have offered to help. While BP has had good luck to date, that doesn’t guarantee anything, but it’s still encouraging, hopefully BP and the US’s luck holds out.
Third, they are trying a funneling system that if BP can get it into place can stop or drastically reduce the continued outflow of oil into the ocean. The funneling system has been done in shallower waters, so whether it will work or not a mile down in the ocean is still in question.
So my decision to buy back into the stock, like my decision to sell out of the stock is based on a gamble. Is this good investing? No, but I’m only playing with money that I can afford to lose (but, I really don’t think BP will go under…).
Anyway, I really hope that the funneling system works! If not, it will be horrible for Louisiana, Florida and the entire Gulf of Mexico.
-MR
UPDATE: Wow, the DOW fell 1000 points in practically less than 1 hour! It ended the day down 347.80, but wow. Apparently, there was a glitch in the system. One stock went from $40 all the way down to 1 cent, then back up to almost $40.
UPDATE: (5/10/2010) Yes, the funnel failed, so I jumped back out of BP. Enough oil has spilled out that I’ve decided to lick my wounds (sort of, after all I still ended with a gain because I’ve been in the stock for at least a year) and give up on BP. I may sit in cash for a while until I find something else good to invest in! The BP mess is so bad that I decided not to jump back into the stock.
I think you made the right move if you are in it for the long term. Short term sure it is going to hurt BP, but won’t have a lasting impact. XOM is a good example.
@MoneyCone
Thanks, I was very surprised when I looked at the Exxon’s stock chart from 89.
I really hope the cone/funnel apparatus works! Poor New Orleans! They just got through one disaster, and now they have to deal with this…
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It is always tempting to jump in after a drop. Even if it does go down further, you are better off than had you bought and hold originally.
@Kris
I think so too, even if it’s not a huge savings. I don’t do this too much, but it’s fun to play the market like this sometimes. I actually initially planned on holding BP for years, so it’s just a little savings, but still fun 🙂
Wow that was a ridiculous few minutes in the stock market just now. I have never seen it just plummet like that over such a short period of time. That was unbelievable.
@Kris
I just got back from an eye exam, and I’m like “what happened”?
Something about Citi?
This is definitely a good time to buy in BP is a strong company and their stock will almost 100% go up and this could be an opportunity to make a short term gain on your money.
in these times its always nice to pick up some gains here and there.
@James
I agree, if they can get the funnel system in place Sunday night/Monday morning… that would be great!!! Plus BP has a great dividend!
I didn’t mention it above, but I actually double down on the stock at these prices…
I’m just upset beyond belief by this huge mess. Where can I find an accurate assessment of the real size of the spill? The information are all over the place. Thanks for your informative post.