dare you to short this..., page-2

This is what got me into BHP

Yes, investors clearly need to lower their returns expectations going forward (somewhere around 10%pa would be prudent), but there should be absolutely no doubt that the trading correction has actually increased our chances of being those lowered benchmark index returns via being aggressive, high conviction, stock-pickers.

The easiest way to beat the index is via firstly focusing on the upcoming fy06 reporting and dividend season. The market seems to have forgotten we have a record reporting and dividend season pending in August, and today you can buy fy06 earnings and dividend streams with just 17 days left to run in the financial year. I can buy fy06 earnings and dividend streams at prices up to 25% below those of four weeks ago, and that to me is like being paid for a risk you didn't take. $22Bil of dividends are forecast to be declared in the fy06 reporting season, and that doesn't include special dividends or capital returns.

If you've been underweight BHP for example, you can buy the largest mining company in the world, and the 8th most profitable company in the world, almost -20% below recent highs. You will be on the register for the record fy06 result in August, and whatever and dividend and capital management initiatives the company announces. You can buy all the leverage to fy06 via only owning the stock for 17 days in that financial year.

But the value doesn't stop there. You're also buying BHP on 10x consensus fy07 numbers, and closer to 8x realistic fy07 numbers (using more realistic commodity price assumptions). If you buy BHP today and hold for 15 months you'll be exposed to two record full year results, two full-year and one interim dividend, and potentially some of the largest capital management initiatives ever seen from an Australian company. You'll also be on the register as analysts revise consensus earnings up by around +30% over the next 12 months.

BHP; right back at the uptrend line



So while everyone who never predicted a trading correction is now concerned, and the tone of the financial media has turned to pessimism, we believe the time is absolutely right for genuine investors to start taking advantage of the opportunity instant-gratificationists are now giving us.

For six weeks we have advised you to "be patient, be prudent, and focus solely on quality" Today I am dropping the "patient" advice, and now we only recommend you are prudent and focus solely on quality. I want you to find the courage, take advantage of the pessimism, take advantage of macro driven concerns, take advantage of forced selling (margin calls), and selectively pull the trigger on quality earnings and assured fully franked dividend streams.

Don't do what everyone else will do and wait for the comfort of others buying. The volatility is reaching a crescendo, and that means the opportunity is reaching a crescendo. Think like an investor; act like an investor; focus on earnings, dividends and capital management; start by buying BHP today.