BP Confident of Turnaround

By GUY CHAZAN

LONDON—BP PLC shares jumped 4% Tuesday as Chief Executive Bob Dudley said the company had reached a "turning point" in its efforts to rebound from last year's Deepwater Horizon crisis, though some quickly said his declaration was premature.

Mr. Dudley was speaking as BP reported a third-quarter profit of $5.3 billion, down 4% on a year-to-year basis but still slightly higher than most analysts had forecast. In announcing the results, Mr. Dudley said BP, with last year's Gulf of Mexico debacle receding, now enjoys a rosier future of higher production and strong cash-flow growth.

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The results come on the heels of a $4 billion settlement with one of its partners in the blown-out well that caused last year's spill and amid signs that it might soon be able to resume drilling in the Gulf.

Mr. Dudley also said BP would sell $15 billion in assets by the end of 2013, on top of the $30 billion divestment program it announced last year. That includes the two big U.S. refineries it announced it was selling earlier this year.

But there was some skepticism that BP has truly turned a corner. "I think they're overplaying it," said Peter Hutton, an analyst at RBC Capital Markets. He said a real inflection point would be news that the company had won its first permit to drill for oil in the Gulf of Mexico, after months of frustrating delays.

BP insists it is on the road to recovery from last year's Deepwater Horizon disaster, caused when a drilling rig it was leasing in the Gulf exploded, killing 11 men and triggering the worst offshore oil spill in U.S. history. BP has estimated it may cost as much as $40 billion to pay for the spill, including the clean-up and penalties. A slew of spill-related civil litigation is pending in a federal court in New Orleans.

To repair its battered reputation, the company has put a focus on safety and launched a wide-ranging program of maintenance and repairs at 48 of its facilities.

But the overhauls put a lot of its fields out of action. That, coupled with the delays in BP's return to the Gulf of Mexico and the effect of asset sales, has led to a big drop in production: it fell 12% in the third quarter. That meant BP was less able than peers such as Royal Dutch Shell PLC and Chevron Corp to benefit from high oil prices, which soared this year owing to unrest in North Africa.

Concerns about output have weighed on BP's share price, which is still nearly a third lower than it was before the Deepwater Horizon crisis. Some investors have called for drastic action, such as a break-up of the company.

But Mr. Dudley insisted Tuesday that the company is at a turning point. "The low point in production has now been passed," he said. "Most of the big turnarounds this year are complete and production is rising again." However, he also said that BP wanted to get off the "treadmill" of constantly having to report higher production volumes. "We're going to focus on value rather than volume," he said.

Investors, however, are still eager for more concrete proof that BP can stop the slide in production. In particular, they want it to resume operations in the Gulf of Mexico, an area that accounted for a huge chunk of BP's output before Deepwater Horizon and is a source of much of its future growth. "We really need to see them drilling again in the Gulf before we can get sanguine about production," said Jason Gammel, an analyst at Macquarie Research.

That value will come from concentrating on high-margin barrels—oil fields that yield fat profits in places like the North Sea, the Gulf of Mexico and Angola. He predicted that by 2014 BP's operating cash flow will have increased by 50% compared to 2011. Half of the increase would be invested in oil and gas projects and around half paid out to shareholders in dividends and share buybacks. That raises hopes that BP will increase its dividend next February, possibly restoring it to the level it was before the spill.

On that front, though, the signs are encouraging. Last week, U.S. officials approved BP's first offshore-oil-exploration plan since last year's disaster. Mr. Dudley said that BP hopes to have five deep-water drilling rigs operating in the Gulf by the end of the year, increasing to seven in 2012.

Another reason for the greater optimism in BP is the long sequence of official reports into the accident that it says bolster its view that it wasn't solely to blame for the blowout. Another big success for BP was when Anadarko Petroleum Co., one of its partners in the Macondo well, agreed to settle with it earlier this month. Analysts say the likelihood that BP will be accused of gross negligence—an outcome that could leave it exposed to massive fines and penalties—is receding.

BP said its clean-replacement-cost profit, a keenly watched figure that strips out gains or losses from inventories and other non-operating items, fell 3.6% for the period to $5.33 billion, compared with $5.53 billion for the third quarter of 2010.

Fromt the Wall Street Journal.

Asia Job Outlook

Malaysia, Indonesia,Thailand the New Frontiers of Asia

Written by Kyle Stock

China and India have long been called the "Wild West" of contemporary business and lands of unlimited upside. People forget that in the original Wild West, every yahoo with a pick-axe and a gold pan showed up.

In Asia today, the savviest finance professionals are looking further afield, prospecting in a rash of smaller markets benefitting from the boom of bigger neighbors, but lacking the bustle.

"There's clearly an acknowledgment that this is where the growth is," said David Webbe, the head of Southeast Asia for recruiting giant Korn/Ferry. "And a good banker wants to exercise their skills in a market that is dynamic and will reward them."

In recent months, Webbe's team has been on the hunt for commodities and currency traders, capital markets professionals and consumer bankers, among others.

While China and India keep growing, they have pulled surrounding countries along in their tracks. Labor markets are strengthening all over these tiny markets. Consider, for example, the unemployment rate in Thailand: 0.42% (yes, the decimal point is in the correct place). Or a new fund launched by HSBC in May dubbed CIVETS. Intending to target the newest and hottest emerging markets in the way the BRIC moniker did; the "I" and "V" stand for Indonesia and Vietnam.

What's more, professionals in many smaller countries often don't have the same level of education, so a degree from the West can open doors quickly.

"People like to hire Asian bankers who have a Western influence," Webbe said. "The perfect balance is a young man or woman who is Singaporean or Indonesian and has been educated in the United States or Australia."

Cartus Corp., a global relocation firm, has seem a big uptick in business in Malaysia, Indonesia and Mongolia among others, said Kenneth Kwek, managing director for the region. Kwek and his team have been lining up housing and language lessons for managers of big global companies who are rotated through Asia on two- to three-year tenures.

"If you look at the economy on a whole, these markets are some of the only places where results are way up," Kwek said.

Below are some basic stats on the emerging emerging markets of Asia:

Indonesia

Credit rating: Ba1

GDP growth since 2008: 17.6%

Personal spending growth since 2008: 15%

Unemployment rate: 7.1%

The engine in Indonesia is human capital. As the fourth-most populous nation, the country is a consumption powerhouse. That isn't lost on Goldman Sachs and Morgan Stanley who are reportedly jockeying to buy Indonesian broker Tiga Pilar Sekuritas. If the deal gets done, look for a tide of wealth-management talent flowing in from the States.

Malaysia

Credit rating: A3

GDP growth since 2008: 8.7%

Personal spending growth since 2008: 13.2%

Unemployment rate: 3.4%

Malaysia now has a bank for every one million or so residents, crowding that has spurred its lenders to look for business all over Asia. The country is also a high-tech hub, an attribute that has won a lot of back-office work from finance firms worldwide.

Philippines

Credit rating: Ba2

GDP growth since 2008: 14.5%

Personal spending growth since 2008: 11.7%

Unemployment rate: 7.2%

The Philippines is another attractive market for wealth managers. Workers around the world consistently send more money back to this island nation than almost any other country. Only India, China and Mexico have more remittances.

Like Malaysia, the Philippines is also a popular hub for back-office bank support.

Thailand

Credit rating: Baa1

GDP growth since 2008: 6.6%

Personal spending growth since 2008: 6.2%

Unemployment rate: .42%

Thai banks are some of the world's most resilient, according to a recent Deutsche Bank report. As if to buttress that claim, Bank of Thailand Governor Prasarn Trairatvorakul recently said his country's finance sector would be largely unaffected by the European debt crisis.

Vietnam

Credit rating: B1

GDP growth since 2008: 33.4%

Personal spending growth since 2008: 31.6%

Unemployment rate: 4.4%

Though it has been plagued by inflation, Vietnam is still a manufacturing darling, welcoming assembly lines from Japan and other more affluent areas.

It's also in the process of opening closely held state enterprises to the markets at large. Just a few days ago, the government sold a 15% stake in its Vietcombank to Japan-based Mizuho Financial Group for $567 million. Credit Suisse brokered the deal.

Source: Moody's, Thompson Reuters

Write to FINS at editor@fins.com

Working the Recruiters

By DENNIS NISHI, from The Wall Street Journal

Laurie Ruettimann does not want to be sent flowers. Ever.

The human-resources professional from Raleigh, N.C., remembers getting an expensive bouquet while working as an in-house corporate recruiter years ago. The arrangement had been sent to her by a hopeful job hunter but the overture actually made her angry.

"Gift giving means that you're somehow indebted, and when you force that on somebody it's inappropriate, even offensive," says Ms. Ruettimann. "I responded like I would with any other candidate. When we didn't move forward with his résumé, I just sent him a note, automated through the system."

Find the recruiters who service your specific niche and try to meet them face-to-face at trade events. Getting an introduction from a colleague is another good way to get in.

In the current tight job market, cold calls and gimmicky gestures are the worst ways to approach recruiters—especially if your skills don't exactly match the job. Instead, experts recommend old-fashioned networking as the best way to get onto a recruiter's job-candidate list, but the effort requires more than just a LinkedIn invitation.

But don't launch into a sales pitch upon meeting, says Ms. Ruettimann. Try throwing the recruiter some business. Offer an introduction to somebody within your network who's having a hard time filling a job. The recruiter may return the favor by keeping you in mind for future jobs.

Recruiters prefer working with employed job candidates, so make your connection while you are still employed or immediately after being laid off.

There are exceptions, says Tim Honn, president of Fortis Recruiting Solutions in Lisle, Ill. If you took time off to care for an ill parent, companies will understand that. But it's important to show that you stayed active while unemployed, and this includes pursuing extra career training, consulting or doing volunteer work.

"You never want to give the impression that you're just sitting around and waiting for calls," says Mr. Honn, who also advises job hunters to never omit anything that can be uncovered with a Google search. He recently uncovered résumé inconsistencies while doing reference checks on a job candidate. The omissions killed the job hunter's chances with the company and Mr. Honn.

Be strategic with your job search. Plastering yourself all over the Internet and on every job site and database can make recruiters suspicious, says Ms. Ruettimann. "It makes you look desperate, and recruiters don't want to waste their time if you've already been turned down by a bunch of companies."

—Email: sjdnishi@gmail.com

Why We Can't Let Go of Our Losers

Taking a loss is hard to take. But avoiding a loss can be much worse.

U.S. stocks have lost some $4 trillion since their peak in October 2007, but investors aren't fleeing the market en masse. So far this year, according to investment-research firm Morningstar, investors have taken $14 billion more out of U.S. stock mutual funds and exchange-traded funds than they have added. That is less than 0.4% of the total assets of U.S. stock funds.

Can losing money feel good? Recent experiments show that reward circuits in the brains of investors who have losses will fire intensely whenever money-losing holdings have an uptick in price. Jason Zweig has details on The News Hub.

In other words, while some investors have taken their losses, most are grimly sitting on them.

That could be a mistake. Research published in 1998 by behavioral-finance professor Terrance Odean of the University of California, Berkeley, showed that individual investors are 50% more likely to sell a winning stock than a loser—even though, on average, the stocks these investors sell go on to outperform while those they hold onto underperform.

Why the reluctance to bail? Selling an underwater asset, says Mr. Odean, "isn't primarily about economic loss, it's about emotional loss." Once you sell below your purchase price, he believes, you can no longer tell yourself, "I still made a good choice, and it'll come back."

Individual investors aren't the only ones who can't make peace with their losses, according to numerous academic studies. Mutual-fund managers who cling to losing stocks underperform, by roughly four percentage points annually, the managers who cut their losses.

Enlarge Image

Christophe Vorlet

While some investors have taken their losses, most are grimly sitting on them.

On average, professional futures traders and stock traders hurt their returns by clinging to their losers. Real-estate investment trusts hang onto properties that are losing money longer than they keep those that are in the black.

Unpublished research presented at the annual meeting of the Society for Neuroeconomics earlier this month sheds new light on this old problem. Neuroeconomics is an emerging field that combines the techniques of neuroscience with theories from psychology and economics to study financial behavior.

In one study, led by Gregory Berns of Emory University, people lay inside a brain scanner while deciding to hold or sell an investment; the price of the asset changed randomly up or down. The researchers focused on the ventral striatum, a region of the brain that has been shown to respond to rewards, particularly when they are unexpected.

When an asset was underwater and its price rose, activity in the ventral striatum of the typical person in the experiment was "blunted," or insignificant, rather than robust. "Many of the participants told us they had hope for a rise," says Andrew Brooks, a co-author of the study. Perhaps because these people got what they expected, an uptick in price "wasn't surprising," Mr. Brooks says, and therefore didn't excite this part of the brain's reward center.

That suggests that many investors who are losing money may automatically assume—rightly or wrongly—that their position is bound to recover.

Other research at the meeting pointed to a second flaw in how investors might think about losses. A study led by Camelia Kuhnen of Northwestern University found that people are much worse at estimating whether a bad investment will produce mild or severe losses than they are at predicting whether a winning investment will generate small or large gains. "Learning [about probabilities] is particularly faulty," Prof. Kuhnen says, "when people are in a bad environment with losses left and right and they have their own money at stake."

There are several steps that can help you dump your losers.

First, get a second opinion, from a financial adviser or an investor you respect, on your money-losing positions. Ask not whether you should sell the investments, but rather if they are worth buying at today's price. If the answer is no, consider selling.

Measure how long you hold your losers and your winners. If you hang onto your money-losing positions much longer than your winners, then put yourself on a regular schedule of looking for losses to harvest. (You don't have to wait until December.)

Taking a loss is easier when you think of it as a swap—in which you replace a loser with a new investment in a similar (but not identical) asset—rather than a sale. That makes taking action easier, since you aren't forced to admit that your original judgment was a complete failure.

Finally, realize that a loser can change from a liability to an asset when you close it out at a loss, since you can use losses to offset up to $3,000 of ordinary income on your tax return.

"Think about the term 'harvesting your losses,'" suggests Meir Statman, a finance professor at Santa Clara University. "That should put you in mind of strolling in an orchard picking ripe peaches rather than rotten losses." Just be sure to check with your accountant to make sure the loss is worth taking.

— intelligentinvestor@wsj.com; twitter.com/jasonzweigwsj

http://online.wsj.com/video/can-losing-money-feel-good/4AB9017B-0118-43F9-8890-6540ED4A1654.html

From The Wall Street Journal. Written by Jason Zweig