Last week, I sat down to write this piece as bp’s share price was rattling up and peaked at £4.79. It felt like we were approaching something significant. The £5 mark loomed large, that clean, round, psychologically satisfying number that seems to matter so much more than £4.79 or £5.03.
But then earlier this week happened. The oil price dipped, and with it, bp’s share price retreated. Because, of course, bp’s fortunes are tied to commodity prices largely outside their direct control.
As I send this piece today, guess what? We’re on the rise again. This last week is writing the story for me.
Anyhow, the conversations we’ve had with bp employees and shareholders for years keep circling back to the same thing: “We’ll sell at £5.”
The round number obsession
Humans are pattern-seeking creatures. We find comfort in round numbers. They’re easier to remember, easier to calculate, easier to feel certain about.
Remember when everyone was fixated on the FTSE hitting 7,000? Or 10,000 more recently? Or when Roger Bannister broke the 4-minute mile barrier in 1954, a psychological hurdle that, once broken, suddenly seemed achievable by dozens of other runners within months?
Round numbers feel like they mean something. Like they represent a threshold, a validation, a moment of arrival.
But here’s the thing: they don’t. Not really.
£5.00 per share is no more rational a selling point than £4.87 or £5.14. The number itself is arbitrary. What matters is value, risk, and your personal financial plan.
The £5 target: a moving goalpost
I remember working with bp employees back when the share price was in the £5.50 region. Back then, everyone was waiting for £6. It’s always been the case. Whatever the current price, there’s always a round number just beyond reach that becomes the new fixation.
Many currently suggest bp shares are undervalued. Some say they’ll hit £5. Others have different views. The truth is, nobody knows with any certainty where the share price will go.
One theme we’ve seen over the years: current bp employees often feel the share price is undervalued, whereas former employees or outsiders often feel the opposite. That’s not true in all cases, and I wouldn’t have the foggiest, but it’s certainly a fair observation from our perspective.
What we do know is that so many factors impact the share price: wider investment sentiment, global geopolitical issues, oil prices, dividend policy, regulatory changes. I could go on. In short, unless you have a crystal ball, it’s a guessing game.
The last time bp traded consistently above £5 was back in 2019-2020, before the pandemic decimated energy demand and the share price crashed to just above £2 in 2020. Context matters.
What this means for your bp holdings
As financial planners (not stock pickers), our job isn’t to predict whether bp will hit £5 or £6 or fall back to £4. Our job is risk management: minimising exposure to the wrong risks and maximising exposure to the right ones.
The reality with holding significant positions in any single company share, bp or otherwise, is twofold:
Volatility risk: This can be a great risk to be exposed to in a globally diversified portfolio, but not in a single shareholding where a catastrophic event could lead to the next risk, which is absolutely to be avoided.
Risk of loss of capital: Company-specific events can permanently destroy value in ways that diversified portfolios protect against.
We’re not saying that waiting for £5 is inherently good or bad. We’re simply pointing out that fixating on that specific number is arbitrary, a psychological anchor rather than a financial strategy.
The irony of last week
Here’s what made last week particularly poignant: as the share price climbed towards that magic £5 mark, we found ourselves having the same conversations we’ve had for years with bp shareholders who are intellectually onboard with diversification but emotionally anchored to a target number. “We’ll sell at £5 and then diversify.”
But volatility works both ways. The price that was £4.79 last week has since retreated. Who knows where it’ll be next week, or next month?
If you’ve decided that diversification makes sense for your situation, that the risk of concentration outweighs the potential upside of waiting, then the specific price at which you execute matters far less than the act of executing itself.
The cost of waiting: a year in review
Here’s something worth considering. At the beginning of last year, bp shares were trending towards £5, much like they are now. If you were waiting for them to hit that round number before selling, you’re still waiting. The share price today is basically where it was a year ago, maybe a tiny bit less.
But what if you hadn’t cared about hitting £5? What if you’d sold a year ago and invested in a diversified portfolio, let’s say the S&P 500 as a simple benchmark?
You’d be up just under 15%.
That’s the opportunity cost of waiting for a psychological milestone. Not just the risk of what could go wrong with a single company, but the returns you’re missing from a diversified portfolio whilst you wait for an arbitrary number.
This isn’t hindsight criticism. It’s a demonstration of what concentration risk actually costs. The S&P 500 might underperform bp shares next year. Or it might outperform again. The point isn’t to pick winners. The point is that diversification gives you exposure to broader market growth whilst you wait for your chosen company to hit your chosen number.
Our view
We work with over 380 client families, 90% of whom have bp connections. We’ve seen share price cycles, restructurings, dividend cuts, windfall taxes, and everything in between.
Our consistent message: have a plan. Execute the plan. Don’t let arbitrary numbers drive decisions.
All of this, by the way, is easier said than done. We’re humans after all, not computers.
If you’re approaching retirement, or already retired, or simply have significant wealth tied up in bp shares, the question isn’t “What’s the share price target?” It’s “What price does my financial plan need me to sell at to live a life of financial freedom?” among others.
Often, clients don’t need the share price to double to have a retirement full of serenity, choices and freedom. But they cannot afford for the share price to halve, otherwise those luxuries can be taken away.
Sometimes the share price will be higher when you diversify. Sometimes it’ll be lower. But the risk reduction happens immediately, and for most people in most circumstances, that’s worth more than gambling on hitting a round number that may or may not arrive.
Who can you think of that’s waiting for bp shares to hit a specific price before diversifying? Share this article with them. Having a plan matters more than hitting a round number.
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This is for educational purposes only. It’s not personal investment advice and we’re not recommending any specific course of action. Everyone’s situation is different, and decisions about share diversification depend on individual circumstances including your overall financial position, risk tolerance, tax situation, and personal objectives. You should consider seeking professional financial advice before making decisions about your bp shareholdings.
While we have extensive experience helping bp employees and alumni optimise their benefits, Emery Little operates independently and is not affiliated with or endorsed by the bp group, including BP Pension Trustees Limited, on behalf of the BP Pension Fund. This allows us to provide objective, independent guidance focused solely on your best interests.
