For those of you who hold BHP, my commiserations.Unfortunately, you have not seen much growth for almost a decade and have been underwater for the bulk of that time.
The trajectory of BHP is interesting because it points directly to the fact that we have not had a mining boom – we have had a mining infrastructure boom. The two are very different. A mining boom is generated by a lift in commodity prices, as such all commodity based stocks benefit from this lift. If you drop the price of iron ore over the top of the price of BHP you see something that is not unexpected but which is nonetheless very interesting.
As you would expect BHP tracks the price of iron ore – a fact a lot of advisors miss. The upshot of this is that you have a leading indicator for BHP. If iron prices rise so to does BHP, if they fall so to does BHP. Investing is really not as hard as it is made out to be…..