TRADE INSTRUCTIONS

Date: February 9, 2018
Name: BHP Billiton
Symbol: BHP (NYSE)
Type: Close
Limit: Sell at market

TRADE RATIONALE

Perhaps proving that too much algorithmic trading is behind the current stock market correction, BHP Billiton closed beneath my revised stop price yesterday so I am closing out this position this morning and booking a respectable 14% gain.

If fears of accelerating inflation really are behind the current sell-off then BHP Billiton is a company that would profit from such a circumstance. Its two primary sources of revenue – oil production and metals mining – should both benefit if higher inflation pushes up the price of hard assets as it normally does.

It appears BHP has been caught up in the wave of selling gushing over Wall Street. However, as the old saying goes, the stock market can remain irrational longer than you can remain solvent, so I am not going to extend this trade since I have no idea how much longer the current downslide will go on.

From a long-term perspective, I believe BHP is worth holding onto for investors seeking both capital appreciation and income. It may take months for the stock market to get this one right, but in the meantime BHP pays a 3.6% dividend yield so you will be compensated for waiting it out.