The BP Oil Spill: The Truth Will Soon Emerge

So for my first real post, I can't help but to express my thoughts on the BP oil "spill". I listen to Bloomberg radio almost every morning during the week and I am amazed at how few stories there are talking about the environmental and economic impact of this continuing spill and how this will affect the region and the Gulf. From what I have collected about the blown well (which continues to leak oil, even as we approach approximately the 5th week since the disaster), the estimates of only 5,000 barrels a day are heavily underestimated and I believe the true value will be revealed sooner rather than later. Even at the rate of 5,000 barrels per day, most people aren't quite aware of just how much environmental damage this is causing and how extreme the effects of 5,000 barrels per day can be. As the story will unfold, the damage to the region/environment will begin to shock many and I can easily see this tragedy being as eye-opening as hurricane Katrina.

Even though BP did not build or own the Deepwater Horizon, I believe they will bear the largest portion of responsibility for the explosion and I can see Obama taking drastic measures (HUGE fines and charges for the deaths of their employees) to help gain more popularity with angry Americans. I do not see BP escaping this mess unscathed and I would find it very unlikely that they can win any case if this does go to trial. The only possible way they may be able to avoid paying such large fines is if the "Top Kill" procedure does work at clogging the hole and stopping the leak.

Stock Tip: If you are a very risky investor and are looking to make a quick gain, I would highly recommend placing your money on BP stock if you believe the top kill procedure will stop the leak. This could easily be a 15% gain on Monday Tuesday if the procedure works. If you are more skeptical or cautious, I would avoid BP stock (even though it is at what seems to be a great bargain) because as each day passes, the true effect of this mess will be shown to the world. I believe that the stock will dip to a frightening low as the story unfolds and the damage is exposed. For the long term investor looking to buy cheap, BP is not the way to go. If you are looking for a long-term (1-2 year) rebound stock, I would recommend Goldman Sachs (GS) who is likely to settle with the SEC. While this amount looks to be in the hundreds of millions, it is truly a drop in the bucket for this Wall Street behemoth. I would be cautious to watch out for their next earnings report following the settlement because this may affect their profits, however, with GS's reputation... I can see them beating the street and soaring above $200.

Last word: I just want to quickly clear up that while I do offer stock tips, I have views about the stock market and the future of the American economy that contradict my recommendations to invest. I only offer such recommendations for people who are bullish on the market within the next 5 years and are looking to invest. As I will further explain in later posts, I am rather bearish on the market beyond the next 2-4 years.