South32 is one of my favourite companies, but i sold the last of...

South32 is one of my favourite companies, but i sold the last of my shares this morning.

I cant calculate an earnings that will justify the $2 share expectation, not this year, and perhaps not even next year, the industry is still trying cover costs, and i expect it will be a slow recovery from an earnings point of view, there is plenty of spare capacity that can be fired up if prices improve (eg. we have Aluminium smelter in Brazil).

The strength of S32 is that it is diversified, which is good for long term stability, but it means any spikes up or down of any one commodity arent going to make or break earnings. For S32 to really fire there needs to be high Aluminium prices, and even thought its use is growing there is a lot of competition to meet that growth. Silver and Zinc are looking good, but they arent going to change to final result much.

I want to buy back in, but dont think i will be able to justify it until it drops to $1.50, i sold today because RIO's results might be the start of a reality check, i think we have definitely seen the worst, but the bounce has been too much. Too much downside risk for me, stashing some money away in the bank for a while. (i also have some Spotless share i feel good about)

I still intend to keep track and post any interesting news i find. But to those enthusiastic holders with opposite views to mine, i hope you’ve done your numbers and can manage ok if it turns out i am right.