Robert Gottliebsen’s report on BHP’s low-cost opportunity pipeline
As a small retail investor I feel compelled to respond to Robert Gottliebsen’s report ‘BHP’s low-cost opportunity pipeline’, to express my personal views. In May 2008, BHP share price reached $50.00 but then fell to $20.00 in November 2008 before recovering to $50.00 in July 2011. From there the share price fell to $30.00 in August 2012 and since then the share price has followed the general upward movement to reach its current level of $36.00, all the time offering a measly grossed up yield of just over 4%. This is apart from several poor business decisions by management along the way including (with Rio Tinto) the loss of dominant position and control of iron ore prices for (apparent) short-term gains which has proven to be a nightmare. Now it must provide higher volumes at lower cost to meet its obligation. The Chinese are laughing all the way to the bank. Plus, to make amends, BHP won’t even give its shareholders back some of its misused capital. Our “No. 1” is not a preferred stock of mine by any measure. Better opportunities elsewhere.
Politicians and Treasury have argued that the banks have enjoyed a [temporary] government guarantee and therefore as a matter of equity should be willing to sacrifice some of their profitability. By the same token, the defined benefits pensions of politicians, public servants and judges includes a permanent government guarantee and therefore, if sacrifices and further disincentives are to be considered in the superannuation system, they should be willing to set the example.
However in the long term, strong banks and less people obliged to rely on government pensions would better serve the interests of the country.
Train wreck ahead?
I was interested to read in Alan’s weekend briefing of 8/12/2012 that he has “felt for more than a year now that some kind almighty train wreck is coming”, referring to (hyper?) inflation as a result of money-printing in the US and Europe.
I’ve been reading and listening for a few months to various sources who have a similar fear, but coming from Alan Kohler gives it more credibility in my mind.
If massive inflation is in our near future, what might the investment landscape look like? What sort of asset classes should I look towards to protect or even grow my capital during a period of high inflation?
I would love to see an article on this topic.
Editor’s response: A good place to start may be Adam Carr’s recent articles on the coming impact of inflation. ‘Prepare for a cash crash’, ‘Inflation lift looms over cash’ and ‘Why gold won’t fold anytime soon’ could all provide some insights into protecting assets from central bank-led inflation.