Be Patient With Oil Company Buys

Lots of investors are eager to jump into what they see as a buying opportunity in the BP Gulf oil spill, including me. Yesterday’s spike in share prices makes it look as if the window of opportunity may be closing. Don’t be too sure.

In a note sent to clients Monday, Cumberland Advisors Chairman David Kotok wrote:

If we get confirmation that the oil is in the Loop Current, then our assessment will go from the “bad” condition to the “worse” condition. That confirmation would mean Florida’s west coast is in danger and that the possible spread around the tip of Florida has become a serous risk. So far we have evidence that the slick reached within a few miles of the LC, but the establishment of a serious amount of oil there is still not confirmed.

We watch; we wait; we hope. But in our gut we know that the unfolding drama in the Gulf of Mexico is destined to become the largest and most costly oil pollution event in global history. We reiterate our recommendation to avoid investment in BP shares or related companies. Their liabilities grow every day.

Two days later and we’re about to see if the latest attempt to plug the leak works. The situation remains iffy, as demonstrated by this AP story that came out at 3:50 a.m. Eastern this morning:

Marking five disastrous weeks, BP readied yet another attempt to slow the oil gushing into the Gulf on Wednesday as a federal report alleged drilling regulators have been so close to oil and gas companies they’ve been accepting gifts and even negotiating to go work for them. President Barack Obama prepared to head to the Gulf on Friday to review efforts to halt the millions of gallons of contaminating crude, while scientists said underwater video of the leak showed the plume growing significantly darker, suggesting heavier, more-polluting oil is spewing out.

We’ll see if the “top kill” method of capping the leak works today.

This entry was posted in Oil and tagged , . Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Here are your three options:

    Option 1: Annual Subscription (no refunds)

    For just $200 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments. This is 17% cheaper than the monthly option. This is what I recommend:

    Option 2:Monthly Subscription (no refunds)

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $20 per month.

    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list

    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author