Proof Media in Hopeless Moral Hazard When Forbes Compares BP With GoldmanCompanies / Oil Companies Jun 01, 2010 - 02:20 AM GMT
When a major mainstream media like Forbes compares BP with Goldman Sachs and recommends investors to buy Goldman stocks, you know the world is in total moral hazard and deserved to be doomed as Marc Faber has always been saying.
Since Forbes is a financial publication, I will refute based on the investment thesis first. Granted both stocks are high risk plays right now, but I'd venture to say compared to Goldman, BP is obviously oversold and a victim of media hype and Whitehouse populist approach.
This conclusion is based on BP dividend yield (currently close to 7%), a strong average annual compound rate of return of 17.9% since 1977 vs. 10.7% from S&P, the growth prospect of crude oil and low forward P/E ratio of 5.64.
The in-depth Chart of Day story of BP on May 6 by Bloomberg (Chart below) should more than confirm my conclusion about BP stocks from a technical point of view.
In contrast, posturing aside, Goldman is yet to even formally acknowledge any misdeed. The entire financial industry, instead of looking into self reform, is fighting tooth and nail with Washington on the proposed financial reform. Many are talking about setting up offshore shops to avoid the regulatory "burden".
Meanwhile, the swift regulatory backlash is coming down on the oil industry hard as we speak to "reform" the drilling safety standard, while a meaningful financial reform act is yet to materialize in our life time.
So excuse me for being more than outraged when Forbes dares to compare BP with Goldman, and the biased-agenda-motivated moral hazard the mainstream media have been brain-washing upon the public.
By Static Chaos
© 2010 Copyright Static Chaos- All Rights Reserved
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