Friday, June 04, 2010

Financial experts say buy BP stock?

Apparently the fall in the price of BP stock is being looked upon as an opportunity for those of you who wanted to buy the stock before but did not because of the prices. They expect BP to weather the crisis and for the stock price to again go up.

Recommended Newsweek story on this topic:

While this may seem counterintuitive, it's actually an age-old investment strategy of buying into a crisis. The theory goes like this: people tend to overreact to disasters like the gulf oil spill. So while the masses go all Chicken Little and run screaming from the stock of any company remotely near the accident, the smart money grits its teeth, rolls up its sleeves, and wades right into the mess, buying up shares on the cheap. Remember, buy the dip; sell the rally. And this is certainly a dip. BP stock is down nearly 40 percent since the Deepwater Horizon exploded on April 20, knocking its market capitalization from $183 billion down to about $115 billion. The supposed smart money is betting this drop is only temporary, and that the stock will bounce back once we've regained our sanity and realized that spilling an estimated 19,000 barrels of oil a day into the Gulf of Mexico is not, in fact, a company-crippling catastrophe.

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