I must admit temptations are hard to resist. Sometimes you have to stop yourself from making silly mistakes. PBR has been on my radar for the past 3 years and there has been times when i almost executed an order to buy it at $40 then at $30. At the back of my mind, someone keeps telling me to speculate on beaten down stocks. But luckily i have my brother who is far better at technical analysis than me, who keeps pointing out the obvious flaws...And you know what, i appreciate 2nd opinion on these things. Looking a the shorter time frame from 2008, i realise that PBR is a $60 - $70 stock trading at such a discount. It is the official, government owned oil company in Brazil, heavily invested in Ethanol production and supply. It enjoys an economic advantage (moat) over other players in the South American region with large number of assets on and offshore.
BUT the real question is:
Why has it not performed as well as ExxonMobil, Shell or Chevron? What is wrong with it?
My best guess is: POOR MANAGEMENT or in this case too much Micro Management and Interference from corrupted government officials.
Lets look at long term trend (technically speaking):
Even the long term support is no longer valid. Technically there is just nothing positive, except that previously the bottom in 2009 was around $14 region and just this year crossed the bearish trend down from 2008 peak. I wonder if NOW this stock has actually started to trend upwards.
Fundamentally its rubbish, Technically is somewhat unpredictable at this point. Buying PBR would not be investment, it would be a gamble, which i must stop myself from doing.
But in all seriousness, the lesson to be learnt here is that; Dont speculate, research on the background of the company, look at their financial data, if they are losing money for some unknown reason, stay out of it. If the company doesnt make money, shareholders get NOTHING too. Technical analysis is great for making decisions clearer, always rely on technicals before executing any order.
Why has it not performed as well as ExxonMobil, Shell or Chevron? What is wrong with it?
My best guess is: POOR MANAGEMENT or in this case too much Micro Management and Interference from corrupted government officials.
Lets look at long term trend (technically speaking):
Fundamentally its rubbish, Technically is somewhat unpredictable at this point. Buying PBR would not be investment, it would be a gamble, which i must stop myself from doing.
But in all seriousness, the lesson to be learnt here is that; Dont speculate, research on the background of the company, look at their financial data, if they are losing money for some unknown reason, stay out of it. If the company doesnt make money, shareholders get NOTHING too. Technical analysis is great for making decisions clearer, always rely on technicals before executing any order.
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