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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (7332)	9/1/1998 6:19:00 AM
From: RockyBalboa	Respond to of 22640

Djane, my opinion just stems from the currency markets. Reviewing the history of permanent as well as transient revaluations, it reveals that excesses are better not curbed by spending money on the own currency. Recent examples: Italian Lira 1994: The lira sank roughly 30% of its value after doubts about the feasibility of Italian public budget plans, along with a depressing huge state debt. The devaluation was announced along with disregarding the prevailing tight exchange rate bands. Later on the lira regained half of the dive and has been stable since that time. US Dollar 1994/95: the dollar went rather quick from 1.80 beyond DM 1.40 along with the ultra tight german monetary policy doing much damage to german economy in a time when the Fed lowered the rates steadily. Buying USD against DM by central banks was ruled out repeatedly. When the same occurred 1992, some actions haven been carried out at the $1.40 level pushing up the dollar 0,04 DM and the only achievement has been an increase in the implied volatilities in currency options. Greek Drachma 1998: Along with the postponement of the participation of Greece in the European Union, the drachma fell silently by some 10%. The fall was attributed to the huge debt and inflation numbers and not accompanied by announced market actions. Rouble 1998: On the day, Boris Yeltzin announced that all efforts will be taken to keep the rouble within its bands. The next day the band was abolished and a new has been set implying a factual devaluation. Regarding the buybacks of corporate stock. It is true that buybacks are announced across the universe now, in reuters I read such messages by the dozen after the bell yesterday. Citing Barb Payne who recently mentioned that announced buybacks are carried out at some 40% level, the signal to the market to "announce" buyback is sometimes considered a red flag. Back in 1990 and 1991 during the Iraq Crisis and the demolition of the USSR, german and austrian banks bought much of the stocks sold by foreign investors into their nostros "to stabilize the markets". At first it stopped the drop which continued within months to even deeper levels. Later on, balance sheets were in red, thanks to heavy devaluations of the stock but that fact was never discussed in public. Whereas the stocks started to regain in germany three years later, Austrian stocks only reached the 1990 level in May 1998, to falter again now. It has been at least a risky, if not deer, action. Finally a thought about the role of the state. If a long term investor is interested in owning a part of an enterprise, it proves to be wise to invest on the dips. But I am not sure, whether a government should take this role, even when it is so devoted to privatization as the Brazilian one. So they could act as a trader who gathers stock and sell it on the next-best occasion when the price recovered a bit. Christian