why is bhp not 14$, page-46

people who compare bhp - or any resource stocks pricing now to gfc - really arent understanding the difference.

the gfc came late to resources pricing and was gone within 12 months. the stock market prices fell but the underlying resource prices didnt crater nearly so much as they have now - and before they had time to the chinese pumped up the lending and - whoosh - the game was back on

thats why the potential capitulation in stocks like BHP is much greater now than then - because this is about erosion of company's true earnings and outlook for worse to come.

as i said ealrier - its a v expensive stock at 22x pe

the optimists will say thats because commodity prices will rise next year

history says the usually it takes about 7-10 years for an oversupply in commodities to move back toward price uplift - usually a long period of nothing in between - think coal in the 1990s

$10 seems to me highly unlikely - frankly i would expect it to be broken up and the divisions become separately listed if that lasted for very long

but it seems likely that with iron ore and coal deeply depressed - bhps best chance to arrest the slide is Saudi Arabia changing its strategy or US shale oil starting to unwind

otherwise below $15 is probable