A decade ago, perhaps the biggest environmental disaster in American history began to unfold. The Deepwater Horizon drilling platform in the Gulf of Mexico exploded in a fireball from high pressure methane gas coming up from the well.

Eleven workers were never found; seventeen were injured. Two days later, a slick began to form. It was the harbinger of the biggest oil spill ever, over 200 million gallons.

Day after day, the nightly news and cable channels showed images of oil billowing up from the sea floor. It was like a never-ending horror show, dragging out for eighty-seven days. Environmental damage to the waters of the Gulf and its beautiful beaches would clearly exact a heavy toll on the fisheries and tourism industries.

The well owner, BP, was rightly vilified for operational lapses and safety practices. Civil penalties and restitution were bound to be in the many billions of dollars. Many people wondered how the company could even survive, or do business afterward.

In the face of these challenges, it is not surprising that the price of BP stock was more than cut in half in less than three months.

The surprising part is that the stock bottomed and began to move up even before the oil stopped billowing into the Gulf.

There is a lesson here about expectations and unfolding reality. When the consensus expectations got below the reality that would eventually emerge, the stage was set for unexpected gains. As a company, BP did pay in many ways for its failures, in amounts that did get into the many billions of dollars.

But reality almost had to be better than the expectations, since the expectations were so low.

(This is not a recommendation, or a recital of our research prowess. We never advocated for the purchase of BP stock near the low point, believing it to be too much to ask of you.)

Near this tenth anniversary of the disaster, we recall this history to note that taking the contrarian approach against the prevailing consensus may sometimes be a fruitful way to invest.

Clients, if you would like to talk about this or anything else, please email us or call.