Fair value $4.74 per share, page-42

a fair post

i just think everyone buying BHP should familiarise themselves with the commodity price behaviours of something like coal during the 80s and 90s

like then, industrial commodities like iron ore tend to stay 'out' for a very long time. they just go sideways.

and that long sideways move is ultimately a stock price killer - because funds and sell side analysts keep readjusting their sum of the part project npvs to lower levels and extrapolate constant flat earnings for years into the future.

whereas right now they still have slightly ' v shaped 'price recoveries in their modelling.

for eg. most will still have us60+ in their 2016 oil assumptions - ill guarantee you. 70 for 2017.

but oil is less likely to be the issue to me.

as ive been saying - til im now literally sick of my own voice on this - the big issue is iron ore - because of the added oversupply they are still bringing on - into a saturated market - with a product that once built stays built.

thermal coal, oil and copper are all consumed and have to be replaced even if demand doesnt grow.

but once you build an apartment block it stays built.

thats the weakest thread to me that could pull bhp down into really crushing lows. (if these arent already)

saturated market. continued growth in new supply (roy hill 55mtpa -next year and added 140mpta from vale + incremental from bhp, rio and fmg as part of unit cost reduction effort)