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

To: md1derful who wrote (7524)	9/4/1998 5:49:00 PM
From: MGV	Read Replies (3) \| Respond to of 22640

Did you get a feeling of a technical (?) turnaround today..or is this all mental masturbation??? I'm flying blind with this one right now and soaking up data and experience for a next time. If I learn something from this, then its not an irreparable loss. Sounds grim, right? As I read and think, I also muse that maybe my attitude is a sign of a bottom. We are all groping for a sign of the bottom (ahem). My gut is that we can't be sure it has hit bottom until the cause of the currency vulnerability is corrected. There are 2 solutions. Mr. Inside and Mr. Outside, I call them. Mr. Inside: The best is that Brazil faces the fiscal deficit head on with Social security reform. That would alleviate currency pressure internally. Mr. Outside: The second is that Japan quits ***ing around and starts letting banks fail, capital flow freely, and fiscal policy to stimulate. That in turn would alleviate currency pressure externally. Now, if it is true that by August 5th, I correctly suspected the absence of either of the above 2 conditions would pressure TBR downward, it is likewise true that not in my wildest nightmares did I also expect that the failure of either of the above 2 conditions would make TBR fall so far*. Of course, now, no one on the street would admit to thinking that the '99 consensus of $12.50 per ADR is current but, if it does happen, TBR is trading at less than a 5X earnings multiple! I know, fundamentals don't matter but, they will. It is selling for 2/3 of book value!! This is a major telecommunications player in a high growth market!! Because fundamentals don't mean anything and won't mean anything until sentimenmt turns and because sentiment won't turn until 1 or both of the 2 conditions outlined above occurs, I won't hazard a guess about whether there was a technical turnaround today. Unfortunately, for now, I think your "or" clause is the dominant condition with TBR.