Nov 21 2008
Take BPT Profits on a Rally; Watch Gold.
British Petroleum (BPT) has been good to us, but since we are close to our buy in and it seems to be falling like a rock, we might as well preserve a little capital out of our big losses and sell on any rally. We’ve gotten a nice dividend, but let’s save the buy in for later after a larger drop in share price. If the price of oil starts to go back up, we can look in to buy in again at a new low. The good return on the dividend that was paid after this buy should soften the blow of any loss. I’d feel better about keeping this stock if oil were even moving in an upward direction. But I think we’ll have time before that happens and we can releverage ourselves.
The loss on many portfolios is now starting to cut into the meat of the initial investment. It’s a shame, but we’ll have to just wait it out and hope for the best in terms of being able to buy in later. There is no end in sight for the drop in this market and no amount of hope seems to rally it up.
A report on Tech Ticker today talked about the terrible drubbing even famous investors are taking, including the most famous, Warren Buffet. It was a report designed to make us feel better about our own losses. However, the frustrating thing about this investment situation is that all investments across the board have either gone down: bonds, metals, stocks, and real estate. So where is a person supposed to put his/her money? Treasuries. TIPS, specifically, if you need the money soon. Most big investors are riding out the storm.
Gold has not gone down enough or sat enough to make a truly worthwhile correction. Having said that, it has sat in the $700 zone long enough to look as though these are the legs of the bottom. Financial gurus are saying that they are hearing through the grapevine that China and Saudia Arabia is buying huge amounts of the yellow metal. Lots of these financial advisors are saying to pick it up now. That would be $150/oz under where I said to sell.
I don’t know if I agree. The price of oil should start to creep up first before gold going up is justified. Right now the dollar is running strong, but watch these markets closely.
Financial action around the world seems to be holding its breath, waiting for a new President to take office. If gold begins to rally with large jumps in the price, it’s probably time to get on board. The last time a correction in gold and oil took place together, the lows lasted fourteen months. That is plenty of time to gather cash and metals of all kinds.
Good stocks to grab when oil begins to ease upward: XLE and BPT. This blog will keep you posted.
