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Babcock and Brown Good Buying for the Long Haul

June 14th, 2008

I’m not a trader. I’m more of a “buy and hold” sort of guy. But when I see an opportunity like this week’s rogering of Babcock and Brown I just had to act.

You see BNB are a blue-chip stock. And when a blue-chip loses more than 50% of it’s value due to market speculation rather than a fundamental flaw in the business, then it’s time to buy.

Quite frankly, I don’t care if the share goes up or down in the short term. If it goes up, I’ll sell out and bank a nice profit. If it goes down even further from the $4.96 I paid per share today, I’ll buy another 10,000 shares or more.

I’m here for the long haul. If you’ve got time to burn, BNB is a sound investment.

Remember the circa 80’s Westpac letters affair?

On that day their share price tanked. I took a punt and bought a bucket-load.

My thinking was:

1. It’s a bank - one of the 4 pillars and very unlikely to fold
2. Buy on bad news, sell on good
3. They pay dividends
4. I’m getting 2.55% by leaving my money in the bank
5. I’m happy to wait a few years to make a profit

In then end this was the best investment I ever made. I hope BNB turns out even better. I predict that by COB Monday 16 June 08  the share price will be back to about $6.50. By December I expect to have doubled my money.

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