Australian Investment Blog

BHP is rapidly becoming a big stone in investors’ shoes!Good morning everyoneOverviewToday we take a look at BHP more closely.Market Matter put an aggressive sell on BHP when it was trading close to $35; now over 40% lower Australia's most inherited asset has clearly hurt many people's overall wealth - see chart 1.However, Market Matters also put an aggressive buy on the stock ~$21.50 and this is feeling extremely uncomfortable.With the China driven commodities "Super cycle" behind us, a strong $US pressuring the prices of resources and a major tragedy in Brazil it was feeling like all the bad news was in the market, but the BHP share price continues to decline! From a contrarian perspective it’s even been heartening to read that institutional brokers are not even trying to peddle BHP at present!Interestingly, unlike Glencore that really a proxy for the copper price, for BHP, the strongest influencing commodity is oil and it is this that sets BHP apart from other ‘miners’. Perhaps this is why BHP is suffering more than the likes of Rio Tinto which has no oil business at all.Theoretically, the stock is yielding 8.65% fully franked which is a great way to illustrate that the market’s not optimistic about its earnings going forward.Overnight, both Iron Ore and Crude Oil were marginally higher, there was no negative lead from US equities BUT BHP fell ~3% which is very concerning. A saying from one of world’s prominent traders in the Market Wizards book comes to mind this morning after seeing BHP's weakness overseas."When your position feels so bad you want to vomit, double up, place a close stop and walk away!" - Buzzy Schwarz.At Market Matters we have previously stated that we never advocate averaging unless it is part of the original plan but the second part, capital preservation, is vital to successful investing.Turning to the Market