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Avoiding the Next BP

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August 31, 2010 – Comments (5) | RELATED TICKERS: MON

In this blog by TMFDanDzombak he asks the question: BP (NYSE: BP) had always been thought of as a blue chip, a stock you can invest in and not worry. But then the Deepwater Horizon disaster happened, lopping off nearly 40% of the company's value. In dollar terms, that's more than $60 billion of company value, gone in less than three months. Many investors are furious and are wondering if this was foreseeable. So how can you avoid the next BP?

He then talks about the Project for Government Oversight, "POGO" which is an excellent source of information about misbehaving companys.

POGO maintains the Federal Contractor Misconduct Database, detailing instances of misconduct from 1995 to the present. Over 15 years, you would expect there to be some instances of misconduct; people are human, after all. What's interesting is to look at the companies with the most instances of misconduct.

He then finishes with the following suggestions and question:

Lesson to be learned
So what can we learn from this?

1. Beware companies that have serious records of mistreating the public trust. This flouting of ethical conventions suggests that such companies will ultimately treat shareholders poorly, too.

2. Diversify. Don't let a BP-like event wreak havoc on your portfolio. It's terrible when you hear stories of people being invested in only one or two stocks and losing all their retirement savings. Don't let this happen to you.

3. Do your homework: BP's atrocious record was available to the public.

What do you think? Is this a real way to avoid the next BP, or just a case of hindsight being 20-20? Let us know in the comments box below.

I suggested the "left" wing rags and blogs are the source he was looking for.

The POGO database is a good place to start. The incompetence of corporate America is best described by the "left" in places such as "Mother Jones", Common Dreams"  "Truthdig.com" websites regularly denounced as "liberal" "left" or "anti business" where  the ideals of Libertarian thinking come closest to fruition as private citizens pay through voluntary contributions for the truth that neither corporate America nor their libertarian lapdogs would have you know. 

In the case of BP there has been a decade of atrticles about their abuses in Nigeria and South America and problems in Alaska and Canada.

But this is about the "next" BP, not the last one.

The "Next" BP:

Common Dreams collects links to storys from other newspapers and watchdog groups. In the case of Monsanto, this is a very small representation of what is there.

Monsanto:

Arguing to prevent honest labeling of legitimate concern to consumers.

http://www.commondreams.org/headlines03/0708-10.htm

Disregard for the its neighbors and customers.

http://www.commondreams.org/headlines07/0212-03.htm 

http://www.commondreams.org/headlines02/0101-02.htm 

Covering up evidence the products are harmful.

http://www.commondreams.org/headlines05/0522-03.htm 

http://www.commondreams.org/headlines06/0108-01.htm 

http://www.commondreams.org/headline/2008/11/12 

poor quality regulation.

http://www.commondreams.org/view/2009/07/20-13 

Friendly regulators

http://www.commondreams.org/newswire/2009/07/22-14 

Corruption.

http://www.commondreams.org/headlines05/0107-10.htm

Regards

The Grand High Exalted Mystic Liberal Rag Reading King Devoish

5 Comments – Post Your Own

#1) On August 31, 2010 at 8:12 PM, ikkyu2 (99.36) wrote:

The right question to be asking is, is this a disaster that really is going to cost BP $60 billion of its intrinsic value going forward?

If not, you could skip all the navel-gazing you've indulged in here in this post, and just buy stock.

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#2) On August 31, 2010 at 8:41 PM, FleaBagger (28.78) wrote:

I didn't read all the links, but did you forget "Using perverse patent law, P.I.'s, and lawyers to steal the farms of innocent victims of seed drift"?

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#3) On September 01, 2010 at 5:53 AM, devoish (97.62) wrote:

ikkyu2,

Your question is a good one, but this post is about finding the next BP, not the last one. BP is still the same reckless company it was before the gulf accident, but smaller, having sold off some pieces. Its corporate culture has not changed in this short a time and even if it does change there is still a legacy of recklessly built projects in its stable. With a market cap of $100 bil, I think BP is still a candidate to be the "next BP" with substantial potential to have another huge disaster. I just do not believe they have built any other oil well any better than the one we have read about.

FleaBagger,

No. May I plead time and energy constraints? Despite suggestions otherwise, I am not paid to blog. I did not find a link to a story that did a good job dealing with those issues, but I am aware of them. If you could provide such a link that would be helpful.

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#4) On September 02, 2010 at 6:29 PM, umps15 (32.51) wrote:

I've also been thinking that monsanto will have some serious unforseen scandal that will wreck the share prices. They are playing with fire (genetic engineering)... and there is no way they fully understand and care about the risks involved in their product.  

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#5) On September 03, 2010 at 8:44 PM, AllStarPortfolio (22.77) wrote:

Hey devoish, i saw your note on AllStarPortfolio, and left you a response.

solaris

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