Like most people, my Self-Managed Super Account is for the long term. One of my primary goals is to buy top quality companies at lower prices. One tactic is to place “resting orders” to buy stocks at what look like ridiculous prices, well below market. And yesterday, I was hit on a BHP order, buying at $22.
Resting orders must be managed carefully. One risk is having too many, getting hit on all of them in a meltdown, and not being able to pay. Investors tend to use them selectively, on the most desirable long term holdings. BHP is the world’s largest mining company, with an excellent track record and leadership that have successfully managed through the commodity cycle. Diversification demands exposure to this key Australian industry, and in my view there’s none better than BHP.
Given the universal gloom around China, commodities and global growth, why would anyone buy BHP? Take a look at the chart below. It’s a monthly chart, showing BHP’s performance this century. The range is $7.87 to $50. The green line is $22. It’s possible BHP could plunge to $18, but looking at the chart I’m happy with yesterday’s trade.