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Petrobras - Bad News Continues For This State-Owned Giant

Companies / Oil Companies Sep 16, 2015 - 02:12 PM GMT

By: DailyWealth

Companies

Today's chart shows that one of our most important warnings is ringing true again: Avoid long-term investments in government-owned companies.

Over the last few years, we've written several times about why investing with the government as your partner is a bad idea... especially in government-owned companies headquartered in foreign countries with traditions of fiscal mismanagement. Politicians are great at spending money and pandering to mobs... but they're terrible at running projects for profit.


Brazilian-owned oil firm Petrobras has been a poster child for this idea for a while now. As regular readers know, there aren't many things going in the company's favor today. It's one of the highest-cost oil producers in the world. Dirt-cheap oil is killing profit margins. And worst of all, the company is horribly mismanaged and faces massive legal troubles.

As you can see from the chart below, the hits just keep coming for Petrobras. Its stock has plummeted 70%-plus over the past year... and shares just touched a new 52-week low. Our longtime skepticism surrounding the company has proven correct once again.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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