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1 of 1- TraderJay
- Exchanger
Offline - Registered: 3/11/2015
- Posts: 69
BP fined, stocks rise, huh ?
Just read an article that BP has settled with EPA over gulf oil release. $18,700,000,000 fine and the stock rises ! What kind of crazy, backwards world is this ?
Why is no one asking how much more we're going to pay for gas/oil, to cover these costs, as we ask when minimum wage is talked about ?
- Goose
- Cogito ergo sum
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- Registered: 1/29/2015
- Posts: 13,427
Re: BP fined, stocks rise, huh ?
I would assume that the stock price rose because the agreement removed uncertainty about the settlement, and worries that it could have even been more. The settlement was never going to be $0, and the stock price leading up to the settlement reflected this.
We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists.
- tennyson
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- Registered: 2/06/2015
- Posts: 6,654
Re: BP fined, stocks rise, huh ?
Goose wrote:
I would assume that the stock price rose because the agreement removed uncertainty about the settlement, and worries that it could have even been more. The settlement was never going to be $0, and the stock price leading up to the settlement reflected this.
I agree. The market had alread priced a lot of this in. The settlement is a little more than BP had anticipated (I believe they extimated 43 Billion for initial cleanup and the settlement and this is going to bring them in about 2 Billion higher), but the payments will be spread out over somewhere about 18 years.
"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
- TraderJay
- Exchanger
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- Registered: 3/11/2015
- Posts: 69
Re: BP fined, stocks rise, huh ?
Here's what I see and hear:
Minimum Wage Increase: "I'm going to pay more for my burger, costs must be passed onto the consumer."
Marsellus Shale Tax: "The price of gas is going to rise if we tax extractors."
BP fined 18.7 billion: "The market priced it in already."
The fools that just invested are helping to pay the fine.
Never a word on what is passed onto consumers for million dollar bonuses.
- •
Thread Starter- Goose
- Cogito ergo sum
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- Registered: 1/29/2015
- Posts: 13,427
Re: BP fined, stocks rise, huh ?
I don't see what link there is between the rise in BP share prices, and the minimum wage, new shareholders paying The fine, or "milion dollar bonuses".
Sorry, I just don't.
You tell me. Why did the BP stock price rise?
BP cannot simply demand a higher price for their stock in order to pay fines, bonuses or whatever.
Share price is determined by the market.
Generally speaking, If more people want to buy a stock (demand) than sell it (supply), then the price moves up.
Demand for BP stock rose on the news of the settlement.
Why?
So, were investors eager to pay more for the stock because this liability suddenly came out of nowhere?
Frankly, that seems unlikely.
Did a bunch of foolish people who knew nothing about BP's spill just suddenly show up demanding to buy shares?
Once again, Highly unlikely.
The MSN article gets it right. This is the likely explanation:
Shares gained 3.7 percent to 434.70 pence at 2:45 p.m. in London as investors welcomed news that the company had reached an agreement. A verdict in the Clean Water Act case was pending with a potential fine of as much as $13.7 billion. Under the agreement, BP will pay $5.5 billion over 15 years.
We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists.
- tennyson
- Exchanger
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- Registered: 2/06/2015
- Posts: 6,654
Re: BP fined, stocks rise, huh ?
Also, more than likely anyone purchasing the BP stock at this point was making no difference in putting money in the pockets of BP unless they just issued new stock. That money likely long came and went when the stock was first issued. Current research seems to show and support that BP has more been in the stance of buying back its stock.
Right now gas and oil is not going to rise other than normal holiday spikes, etc till the producers cut back on their (over)production. We WILL and ARE seeing fewer explorations for new oil and gas till prices rebound and as well I would expect that some existing wells are being capped till prices rise again.
"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"