The Gods Must Be Angry (Part 2)

How do you win the favor of an angry god?

The traditional answer is to sacrifice. When Artemis was angry with Agamemnon and prevented his army from sailing to Troy, he sacrificed his daughter and gained the goddess’ favor. I mentioned how BP had angered the energy gods by its hubris yesterday. It seems that today they sacrificed their equity investors by suspending their dividend.

But it’s only a token sacrifice. The company earned $8 billion in the first quarter and had planned to pay $2.6 billion in dividends. They’ve agreed to put just over $1 billion a quarter into a special fund for claims. That’s not even half what they normally pay to equity investors.

The company isn’t going to sell any of its crown jewels, like the Prudhoe Bay oil field in Alaska. And they’re not cutting staff or freezing salaries. Instead, they’re diverting some of their excess to this fund. And by agreeing to contribute to the fund over four years, they make the fund claimants their partners, not their adversaries, just as the Tobacco companies did 10 years ago.

But the gods aren’t so easily fooled. If an ancient deity wasn’t satisfied, he could continue to persecute. If the slick continues to grow, lightning bolts will fly.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-05T19:27:23+00:00 June 16th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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