Lol, wow that is a lot of time and money spent on such a corrupt country.
Personally , i think it's in the middle of the pack when it comes to corruption. But maybe you can prove me wrong if you have a beach house in some 100 other countries.
"I can fully understand why people on this board are confused. LOL"
There is one concept i understand. Confused !!
First we are all on a board where nobody owns this stock right now.
that in itself is funny. I understand some of the issues PBR has, but surely there is a better play than buying at 33 for a buck !?>!
Personally around 30 i'm buying and waiting for the six million barrels a day production.. and/or until it's market cap surpasses apple for example and it will my friends. If it's 8 years or 12 , it's the same.
I have been trying to keep up , but you guys have me confused for a while now ... all of you . I think the Pbr board is one of the brightest/smart/clever ect.. around , but you sure like to make investing very complex. I know my english isn't the best, or any language for that matter .. but man your arguments are long , twisted and very CONFUSING . Not to mention some of you change ideas on a dime..I won't mention names or examples. Gl
<<* while revenues as priced in USD are worth more.* We were not discussing revenue, we were discussing expenses. >>
If one chooses to own PBR and they are discussing currency effects, revenues are a BIG part of the equation.
And I have no idea why you would ignore that.
put it this way:
Lots of folks own PBR as a strategy to hedge a falling USD, no
This is not just me saying that, lots of professionals in the business say the same thing.
So think about the inverse of the above, i.e. an increasing USD
Rule of thumb is a firm whose costs are mostly in a declining currency reap the benefits of that declining currency as it makes them more cost competitive....especially if revenues are in a currency that is appreciating.
However on the flip-side....Should the USD really crater, all bets are off and owning ALMOST any foreign equity will be good for your financial health as costs (in a domestic currency)become less a factor as compared to the gains on the revenue side...especially as oil goes up in price vis-a-vis-a cratering USD..
So rules of thumb only apply if the world doesn't blow up and go over an economic cliff (in the OECD) completely.
In the mean time, a weaker real, is good for PBR on a competitive basis provided there aren't balance sheet issues (i.e. different currency related bonds) clouding the picture.
Doc has continually clouded this issue and I can fully understand why people on this board are confused. LOL
So yes, I will disagree.
You are free to disagree, but...
* when their domestic currencies fall vs the USD, labor as priced in their domestic currencies goes down in price...* This is just plain wrong. If I am a brazilian oilfield worker and I make R$100/day when the exchange rate is 1.6, I make the same amount (and PBR spends the same amount) when the exchange rate goes to 2.00/US$. Ex-pats paid in dollars get more expensive if the real declines, but these are usually employees of a foreign firm contracted in dollars and included in what would be called services.
* while revenues as priced in USD are worth more.* We were not discussing revenue, we were discussing expenses.
<<Inputs, including labor, purchased domestically would be unaffected (other things being equal). >>
Like other foreign operators, when their domestic currencies fall vs the USD, labor as priced in their domestic currencies goes down in price while revenues as priced in USD are worth more.
See Canadian operators as an example.
Only caveat (and offset) is if these same companies also happen to have a lot of debt issued in USD's but even then, the USD -based revenues (for Brazilian holders) might outweigh the effect of USD based debt.
Personally, as a PBR investor (not currently a holder), I would prefer PBr to maintain a good chunk of it's debt financing to be in USD's because in the Long run, I see the USD being much weaker.
But there can be no question, a much higher real vs the USD will have the opposite effect on the cost side and be a bit of a challenge for PBR in the years to come..
(Offset of course by cheaper interest costs for US denominated debt.)
Please, Wins, help me to understand this: *A weak real would help PBR on the cost side*.
A weak Real would make all the products, services and technology currently purchased by PBR in Dollars MORE expensive. Inputs, including labor, purchased domestically would be unaffected (other things being equal).
Hey, Palm, here is you beach house?
Please elaborate on your theory of the *collapse* of the Real. If repatriation of hedge-fund dollars caused downward pressure on the Real, the Brazilian Feds could force Brazilian multinational corporations to repatriate dollars, i.e. buy Reals. I do not see that as the major source of risk.
No. The biggest risk to the brazilian economy IMHO is household debt. While the US economy has been socializing private liabilities, Brazil has been on the opposite course... expanding private debt. There has been a 5+ year credit boom here, a place where consumer finance barely existed previously. One little jolt to employment and you have some scary impact on the banks, durable goods retailers, including the auto industry, and real estate developers.