Well, I have been down in Brazil for a while. Sorry for not writing more. One thing I have been doing is visiting the stock exchange in Sao Paulo to get a feel for the economic vibe. Things are not as fast-paced as they are in New York, but it is still a good scene. Just take the metro to Sao Bento station and walk a block to the Bovespa Futures Exchange.
While there grab a Portuguese dessert at Casa Mathilde. Delicious.
I would also encourage everyone to begin thinking about reinvesting in PetroBras (PBR), the Brazilian oil giant. Yes, I know they are involved in a corruption scandal. But, that is one reason why I believe the time to buy is now, rather than later.
Here is why I think people should give PBR a chance.
- PBR is a semi-public company. President Getulio Vargas founded PetroBras back in 1953. The company is closely connected with the Brazilian government. Of course, this mixing of public and private agendas has caused problems. Politicians running an oil company is probably not the best idea. However, the reality is that the Brazilian government will not let PBR fail. In the USA, we had “too big to fail” companies. Down here in Brazil, PBR is “too national to fail.”
- The stock price is low for a good reason. Investors dumped PBR stock when the company received poor ratings from financial analysts. American accounting firms refused to sign off on the books sent to them by PBR executives. Everyone knew the PBR financial records were phony. The stock has gone from highs of 80 down to single digits. At this time, it has risen, wow, to $9 per share. That price is a steal for an oil company that will not fail. At some point, the executives who caused the damage will have to go, then the company will return to legitimacy. The price will then shoot up. It is better to buy now at $9, then at $50 or $80. The stock is going up slowly. I am sure rich investors are quietly buying chunks. That is why they are rich.
- Oil is still one of our most valuable commodities. For better or worse, most of the world powers its motors with oil. Until an alternative energy source proves more efficient, oil will remain a commodity of high importance. It will be so during the remainder of most of our lifetimes.
Disclaimer-Be aware that all financial investments involve risk. It is up to each investor to themselves decide if they can handle potential losses.