BHP Reports tomorrow and there is a big possibility that it makes a big move — up or down.
In my previous life, my main concern is to protect the profit I already have, I was “new” to BHP so I thought that I need to learn how it moves first and price rises in the stock I held previously (admittedly not of the same league as BHP) is immediately followed by a reversal so the fear factor is there – so following that big jump last week due to the company news of BHP asset sale — I am again having that “take the quick profit” thought. The good thing about having done so is that I took my profits and felt secure. The bad thing about it is that I took my profits and mouth gaped open at the phenomenal rise that continued! Now I’m not predicting it will march upward from here but I want to share that I am now aware of 2 things.
1. My risk tolerance has gone higher — that’s because I’ve enjoyed my profits. (It’s not too shabby after all!) That’s a different mindset to be in versus not being sure you are going to make money or not, or if you are suffering losses, you’d rather take the sure profit and won’t want to risk anymore (except if you have some strong gambling tendencies! But, that’s another post.) So it means, you have gone through the process of maturing.
2. My assessment of the potential move is more accurate — in having that year or so of having BHP I was able to get more insight into the kind of moves that it does, how volatile it is, market influences etc. Studying a stock moving on a watchlist is one thing, having your money on it is another.
So on to BHP’s report tomorrow, I am putting a position for an up move to add to my other long positions (that are already profitable and will be left open) on the following basis.
1. Operational Production – report indicated strong production
2. Low PE ratios – It’s 14.29 and still below the S&P average, below 17 means it is still inexpensive
3. Geopolitical tensions increase oil prices *one of its core assets
4. Dividend payment following the report leads investors to hold the shares and make less shares available for sale.
There is a possibility that it will increase its dividend like Rio Tinto which is the number 2 mining company…
so let’s see what tomorrow brings. Don’t get nervous, don’t get too excited. Just be happy and act according to your overall business plan.
