Deadline tomorrow: should I buy BP stock?

[RandBlade]

Rand, its clearly context based and in Dread's (apparent) context, no, it isn't. Or at the very least it shouldn't. Maybe he's supporting a nasty coke habit and there's not a lot of money lying around, I dunno.

Why?

How do you know how much Dread earns? How do you know how much Dread spends? How much is his rent? If he is living in Manhattan then for a young person your rent and other fixed costs can leave you with not-so-much of your income left as disposable income. I know that I am not a low-income earner but right now while trying to buy a house after I've paid all my necessary bills like rent/fuel/tax/food etc then £200 ($300) would be my disposable income for a few weeks.

You obviously got nothing out of my analogy, especially since in your reply example you're having me bet on extremely unlikely events. You're not betting on the stock market, you're betting on the actions of people. BP stock opened this morning around $39, and now its at ~ $37. Why is that? Because a lot of people who saw it close around $38.92 yesterday, which it rose to likely in response to successful capping of the well, expected it to climb a few cents more, and then they likely cashed out on the stock. These are not things that are extremely unlikely or hard to foresee.

Betting is betting and odds are odds. I never said you were gambling at evens (its rare to do that), I said you were gambling and you're indeed saying you're betting on people. Well guess what, betting on people is gambling. Case closed.

You're honestly telling me that this would be hard to predict, that BP's stock would go up in response to a successful well capping, and that if it went up high enough, would then take a small hit as people sold off BP stock attempting either to cut their losses if they invested before the disaster, or make some money if they invested in the last few months?

No. I never said it was unlikely, I said it was gambling.

You're betting on:

1: The capping being successful.
2: People reacting as you predicted.
3: The change in share price being sufficient to cover all your costs involved in both buying and then re-selling the shares, plus any tax paid.
4: There being a further sufficient change in share price to actually make a profit to make it worth your while doing it in the first place and cover the risks of any of these not happening.
5: The likelihood of capping being successful not already being factored into the share price by other investors before you.

That's gambling. There is a percentage possibility that any of those could have gone wrong.

Mathematically. since the cap worked perfectly, better than hoped, we can say this was the best case scenario. Dread made a profit of $20 from a $300 stake, that was a profit of 1/15. Even if the odds of all this happening (including it working better than expected) were even 90% then odds were against you. If the odds of it all working were 95% then the odds were in your favour but only just. That is the essence of gambling. Unless what happened was 100% guaranteed to happen, that is gambling.

[EyeKhan]

I know that I am not a low-income earner but right now while trying to buy a house after I've paid all my necessary bills like rent/fuel/tax/food etc then £200 ($300) would be my disposable income for a few weeks.

Is that after you add to savings?

[RandBlade]

Is that after you add to savings?

Savings? Right now I'm trying to make sure I can cover all bills and live decently.

Still some "necessary bills" right now are what would normally be savings. EG right now we need to buy a fridge, washing machine, bed, sofa suite etc, etc, etc - the full furniture for a house while paying for legals etc for the purchase while still spending rent on our current rental.

Not sure about the prices in the US but I could definitely cover getting a good washing machine for $300.

[EyeKhan]

Savings? Right now I'm trying to make sure I can cover all bills and live decently.

Still some "necessary bills" right now are what would normally be savings. EG right now we need to buy a fridge, washing machine, bed, sofa suite etc, etc, etc - the full furniture for a house while paying for legals etc for the purchase while still spending rent on our current rental.

Not sure about the prices in the US but I could definitely cover getting a good washing machine for $300.

Oh, you just bought a house? Starter home? Right out of college I spent several years saving for a home down payment and paying down my wife's student loans and credit card debt. It took years before I was able to save seriously, though I always put money in my 401k, up to the company matching limit at least....