Roger Nusbaum submits: Longtime readers may recall I have owned British Petroleum (NYSE:BP) for clients for quite a while. Over the last couple of days I had two clients ask if I was concerned about BP's current events in Alaska. I suppose I have concerns, but in the few years I have been involved with the name there have been several instances where the headlines have been scary but with no lasting impact on the stock.
This ties in with understanding how stocks trade and what types or moves they are capable of. There is some good news today that is going to lift the stock (at least at the start). My initial reaction was that this entire episode illustrates just how important Alaska is and BP has a big footprint there.
Actually the downside was not that bad with this news, but there will be sellers that will regret having sold. This is not a call for a big move up, but I think the stock will simply head back to about where it was.
Clearly this could turn out to be wrong but where BP is concerned I have seen this movie before. This same type of bump in the road-short term dip-go back to where it was move is very common in the market and I think BP is a name that does this.
Again the point is not buy BP. The point is do you own stocks that do this? If so selling into the bump in the road will be a mistake more often than not.