if price goes straight line or skyrocket then why not just buy as much with as much leverage possible but who will be the other side to loose (short term)? lol too many participants expected too much inflation, therefore too much short in treasury but the supply of treasury is too scarce due to too long qe and too much bipartisan deal on infra.
Of course they want it at time that will benefit some. Therefore central bank unwillingness to lose ignites half trillion reverse repo back which means a half trillion of liquidity was just drained from market, way faster than current running QE. Again it is all because participant is expected just way too much! The yield is going down instead, which hit back the participants who expected too much inflation and short the treasury.
Same illustration to bhp, if too many people expected price to skyrocket, that will trigger an evil side of the some intertwined asset that will rather hit back. If we remember iron ore jumped from 150 to 220, the sp of bhp rio fmg was not that much, wasnt that something fishy?. Im not saying China raid was effective but their changing credit impulse (again due to too much market expectation), other participants who got hurt might respond with tightening of credit while the uncertainty is actually remained as they swallowed their inflation on their stomach, ppi higher than cpi
Regardless, I think the trend is kept intact. I did short 3 times bhp since last dividend everytime market expected too much and double my steel position recently. But thats all i can do, im taking a rest now. I think the taper tantrum etc is now more calming, people have less expectation and i think that could be a sign market to continue.
I think if market expected just way too much, in that time is not that bad to take the other side, but i still believe the long term trend is still good, my long view is still to hold since 2017 to next few years, unchanged. I never pickup bottom , never pickup top , dont care much top and bottom.
I was just lucky disposed most in 2019 to property but picked up 3x in 2020. Im happy to hold bhp longer but im not happy and impressed with market expectation to run sp too fast , long reasons but in simple term just because i think is not time yet to end the party, there are many other things way more important. At least by doing that kept me aware more from the short term hype.
Also when we expect bhp to distribute more div rather than paying debt, yes it is good for us, but history told that during initial cycle, preserving dividend with reducing debt, gave higher return (compared to dcf of distributed higher dividend) at the of their cycle, as a kind of higher reward for long term shareholder and punish short term shareholder. Of course holding long term carries more risk.
Good luck!
(20min delay)