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Easy Target or Proper Compensation

November 19, 2012 – 6:58 pm

BP settled criminal charges for the Gulf oil spill paying $4.5 billion dollars to our government. In reading the headlines you might think that is the end of the story for BP and this disaster and you would be very wrong. Civil charges, by the U.S. Government, States and Individuals are still outstanding. Also charges of gross negligence are part of the civil allegations that if found guilty could result in far more money changing hands.

For investors it is this unknown that makes for a difficult decision to either sell, buy or hold onto BP stock. In cases in which billions of dollars are at stake against a corporation the impact of future growth in sales, earnings and even survival have to be weighed.

Where the company’s survival is at stake investors should stay away completely. That is not the case for BP but they have been selling assets for some time gathering enough cash to pay the anticipated massive fines and penalties. $4.5 billion is a minor amount in the overall case.

Big companies are easy targets and the bigger they are the easier it is for them to be punished for wrongdoing and at times just because they are big. Oil is especially a target of choice. Of course BP and others need to pay for their oil spill but that is not the issue. Like the tobacco companies and their massive litigation over decades let’s hope the rest of the oil industry is not attacked by our government just because it’s an easy source of money.

Good Trading
Steve Peasley

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