BP, Rolly Royce, Carnival & Barclays

Do these companies have something in common? Well yes, they have all suffered disasters recently.

On the 20th April 2010 The Deepwater Horizon accident occurred. The rig was owned by BP and their share price fell from £6.55 to £3.24 over the space of 2 months. The shares have since recovered and today stand at £4.37. A rise of 35%.

On the 4th November 2010, a Rolls Royce Trent engined Airbus suffered an un-contained engine failure and was forced to return to Australia. The incident grounded all the Qantas owned Super Jumbo fleet. As a result of that incident, Rolls Royce shares eventually fell from £6.53 to £6.19. As investigations continued the shares rose and fell eventually reaching £5.70 in August 2011. The shares have since recovered and stand today at £8.81. A rise of 42%.

On 13th January 2012 The Costa Concordia ran aground. Carnival shares fell from £23.08 to £17.36. The shares have since recovered and today stand at £22.37. A rise of 29%.

On 28th June 2012 Barclays were found guilty of deception, their shares fell from £1.97 to £1.65. A fall of 16%.

All have suffered disasters but is Barclay’s disaster the same as the others. All disasters have scapegoats and Bob Diamond has fallen on his sword. The Sun’s brilliant headline was “Sign on you crazy Diamond”, as a long time fan of Pink Floyd it made me smile. My last blog made it clear what I thought of Barclays as a business, but having had a few days to consider, have I changed my mind?

Several clients have contacted me and asked me to buy Barclays shares for them. Several clients have contacted me to agree with my comments in my last blog. The jury is split hence the reason for this blog.

Now I must make clear that currently I am only authorised to give advice on packaged products like funds, and not on individual shares. In the past I never saw the point as there are over 44000 funds available globally. But I do now have an application in with the FSA which if successful will allow me to advise on individual shares in the future. In the meantime I cannot advise you to embrace or avoid Barclay’s shares.

I am not proud to admit I personally bought BP and Carnival shares, as many people lost their lives as a result of the disasters. I also bought into the Japanese stock market following the Tsunami where thousands of lives were lost. Each generated a sizeable profit when subsequently sold. I considered Rolls Royce but dismissed it. I was wrong.

It is herd mentality which drives shares too low after a disaster. It is short memories which allow shares to recover. If I was authorised to give advice on individual shares now I know what I would be recommending. Until that permission comes through if you would like to purchase some Barclays shares for yourself, both your Nucleus plans and your SIPPcentre pensions can hold any fund or UK quoted share. You only need to ask. An email would be preferred detailing your instruction to buy if you think Barclay’s disaster is something they can recover from. They will not recover tomorrow however, so there is no hurry. I believe the repercussions will run on and implicate several other banks. The FSA may grant me permission in the next couple of months anyway.

Risk Warnings
This is not financial advice. Any quoted share listed above does not imply a recommendation to buy. Past performance is not necessarily a guide to the future. The value of shares can both fall and rise.

Bankers have been known to lie on a regular basis. (Not a risk warning but nevertheless true).