Investors Should Assume BP Bankruptcy Will Happen
The reason why the BP Gulf oil spill occurred was that nobody thought it would occur. Nobody asked the “What if . . . ” question.
Investors should not make the same mistake. With estimates of BP’s financial liability rising by the minute, at the very least investors should expect BP to suspend dividend payments. More than that, investors should be prepared for BP’s lawyers to walk into a friendly Texas courtroom sometime this summer and get a judge to grant them court protection against legal claims. Technically it will be a bankruptcy filing, although Americans will gnash their teeth at how BP continues to operate normally.
When the filing occurs, the whole market likely will take a tumble. A lot of other “What if . . . ” questions may be asked that destabilize markets for several months. I’ll try to ask a few of those “What if . . .” questions in my next few postings.
With the oil crisis in the gulf, i notice (not by suprise) that the stock price for bp is droping daily. I want to know if it would be a good idea to put money into this stock once it reaches a certain point because i’m pretty sure that the company will bounce back; But my assumptions is a novice opinion.
With the usual caveat that you should always consult your financial professional, let me say that I wouldn’t go near BP. Your premise — that you’ll invest once BP stock reaches a certain point — requires you to know when BP’s stock will bottom out. I have no idea when that will happen and neither does anybody else. Why take the risk?