I sold my BP stock yesterday. In case you’re not aware, BP was the company that was leasing the drilling site that exploded almost two weeks ago, killing 11 people, spilling 5,000 of barrels of oil a day (at least) and threatening the Gulf Coast ecosystems and fishing industry. Recently, BP has promised to pay for the cleanup(not like they really had a choice). Deciding whether or not to sell the stock was a tough call. If the investors already incorporated all the information into the price, it would be too late to avoid losses.

But for some reason I think the market is underestimating the effect this has on BP. The cleanup of the oil itself could cost more than a billion, especially if BP ends up paying for the National Guard that was dispatched (which it probably will). The commercial losses to the fishing industry will be big. If it has to pay for ecosystem damage as well, who knows how much that will cost. There will be pressure on Obama to make an example of BP. Its international reputation might suffer as well. Although according to this analysis, the drop in price was an overreaction. I kind of hope it wasn’t. Sorry, BP!

Want to be notified when I write a new blog post? Sign up here.

I don’t spam!