Author Topic: Venezuela Investing  (Read 1502 times)

Kcinegnet

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Venezuela Investing
« on: May 01, 2019, 06:52:10 AM »
I've recently come across some spare cash.. and along with it the idea for a fun/risky investment in Venezuela. I would like to invest directly in Venezuelan stocks (through ADR's) while their country is in turmoil in hopes of Maduro being ousted and a long term bounce-back. Liquidity is not an issue for me as this would be a long term (and hopeful) investment. What would be suggested courses of action to invest? TD Ameritrade will not let me throw any money into Venezuelan stocks currently and Google has had no good answers on if no foreign stock investors are being allowed or some such thing. Any ideas?

Among a few ADR's listed are..

1 Banco Mercantil MSFZY Banks
2 Corimon CMNFY Chemicals
3 Fondo de Valores Inmobiliarios FNDOY Real Estate Inv&Serv
4 Manufacturas de Papel-Manpa MDPAY Forestry & Paper
5 Mercantil Servicios Financieros MSFJY Banks
6 Sivensa SDNVY Indust.Metals&Mining

radram

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Re: Venezuela Investing
« Reply #1 on: May 01, 2019, 08:06:36 AM »
I wish you all the best.

I certainly understand the concept of buy when others are fearful, and buy when there is blood on the streets, but there is LITERALLY blood on the streets.

This game is hard enough in a stable environment, adding what looks like might erupt into a civil war is just too out there for me. You might want to do some additional research on other countries that have had civil unrest, and how they performed following. Algeria, Sudan, Nicaragua and Armenia come to mind with the help of google.

Keep us posted.

thesis

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Re: Venezuela Investing
« Reply #2 on: May 01, 2019, 08:24:12 AM »
This is a surprisingly interesting concept.

In a way, though, you're trying to call the bottom, but it's not just a financial bottom: it's a social/political bottom. You could in theory invest now while values have crashed, but this is a case where things could easily go lower when financial contracts break down entirely, offices where this information is stored get destroyed, etc. The reason the US (and other countries') financial system works so well is that policy and the rule of law keep it propped up. The US also has a very strong historical identity that, I believe, lends it a great deal of security relative to many other countries.

But there are many takes on all of this, so I'm interested to read other people's thoughts, too
« Last Edit: May 01, 2019, 08:26:16 AM by thesis »

Blueberries

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Re: Venezuela Investing
« Reply #3 on: May 01, 2019, 09:22:37 AM »
I'd recommend investing in India instead.

TrMama

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Re: Venezuela Investing
« Reply #4 on: May 01, 2019, 09:26:25 AM »
Have you read any of Jim Rogers books? He became a very wealthy investor by doing things like this. He's also got a website, maybe you could find out the mechanics of investing in places like this from there.

However I think his method often involved actually visiting the place, which may not be a prudent course of action at the moment.

FINate

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Re: Venezuela Investing
« Reply #5 on: May 01, 2019, 09:45:27 AM »
Your idea is further complicated by US sanctions on companies associated with the current regime. Which companies? Well, being a socialist government almost all the big companies are involved in some way: https://www.bloomberg.com/news/articles/2019-02-04/investors-trapped-as-venezuela-sanctions-put-end-to-bond-trading

Maybe there's some way of getting around the problem? Just be careful that you don't do anything that's seen as aiding/supporting the Maduro regime as you don't want to run afoul of the US gov.

Best wishes. Interested to hear what happens.

reeshau

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Re: Venezuela Investing
« Reply #6 on: May 01, 2019, 09:55:43 AM »
Clearly the country has a high spectrum of outcomes, from nationalization to liberation to military dictatorship.  But among all this chaos, one of the pictures shown in the WSJ's first article on the opening weekend of Avengers:Endgame was an audience in Caracas, all with 3D glasses on.

There is no doubt that there is truly risk, and truly people impacted.  But media outlets also hunt out the worst cases in their hunt for ratings.  If Caracas did their part for Avengers numbers, then perhaps we are collectively tipping a little heavy to fear over greed.

Kcinegnet

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Re: Venezuela Investing
« Reply #7 on: May 01, 2019, 11:56:30 AM »
Definitely appreciate all of the feedback all.
I came across an article on the US Treasury website with some interesting sanction legality information in case others are interested: https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#650

So from what I understand if I can pass an OFAC screen I may be able to invest so long it is not in the aid of Nicholas Maduro (which is I have no intent to help)?
Just like the casino might say.. scared money don't make money!

@Blueberries what makes you think the investment is greater in India versus an overly-inflated country in Civil War like Venezuela?

RichMoose

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Re: Venezuela Investing
« Reply #8 on: May 01, 2019, 02:48:42 PM »
Have you read any of Jim Rogers books? He became a very wealthy investor by doing things like this. He's also got a website, maybe you could find out the mechanics of investing in places like this from there.

However I think his method often involved actually visiting the place, which may not be a prudent course of action at the moment.
It's important to recognize that Jim made most of his money in the 1980s and 1990s. During this time period there was next to zero good information on emerging markets. Jim traveled, recognized better run countries from worse run countries and invested in the better ones. I doubt he would be able to replicate that performance today.

Today a quick Google search can tell you all about governance, property rights, stability, and anything else on just about every country in the world.

dougules

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Re: Venezuela Investing
« Reply #9 on: May 01, 2019, 03:08:58 PM »
Sounds like fun.  I hope you're not putting in any money you can't easily afford to lose, though.  I'd say Venezuela in 2019 is the whole country equivalent of buying penny stocks.  High risk, high potential upside. 

reeshau

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Re: Venezuela Investing
« Reply #10 on: May 01, 2019, 03:18:12 PM »
@dougules , that is a very apt comparison.  You could make a fortune in Venezuelan bolivars, which could then be devalued to nothing.  Yet another angle of risk, unless you focus on a company dealing mostly in foreign activity.  (Which would pretty much limit you to oil)

Blueberries

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Re: Venezuela Investing
« Reply #11 on: May 02, 2019, 07:17:06 AM »
Sounds like fun.  I hope you're not putting in any money you can't easily afford to lose, though.  I'd say Venezuela in 2019 is the whole country equivalent of buying penny stocks. High risk, high potential upside.
 

I generally agree with this.

@Blueberries what makes you think the investment is greater in India versus an overly-inflated country in Civil War like Venezuela?

India has the fastest growing economy in the world.  Much easier money, which is my preference.
« Last Edit: May 02, 2019, 10:09:03 AM by Blueberries »

dougules

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Re: Venezuela Investing
« Reply #12 on: May 02, 2019, 10:26:40 AM »
Sounds like fun.  I hope you're not putting in any money you can't easily afford to lose, though.  I'd say Venezuela in 2019 is the whole country equivalent of buying penny stocks. High risk, high potential upside.
 

I generally agree with this.

@Blueberries what makes you think the investment is greater in India versus an overly-inflated country in Civil War like Venezuela?

India has the fastest growing economy in the world.  Much easier money, which is my preference.

It's more that India is stable, so it's less of a question mark.  Less risk, but less possible reward because Indian stocks are not in the middle of a fire sale. 

vand

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Re: Venezuela Investing
« Reply #13 on: May 02, 2019, 10:26:53 AM »
There's probably a good reason why there are no Venezuelan stock ETFs to trade.

Throughout history, whenever a currency collapses the people do everything to get their wealth out of the local currency to preserve their wealth; what you are suggesting is the opposite.

Any nominal returns you make from stocks will be more than wiped out by the continual collapsing value of the currency. And then there's the issue of capital controls and govt seizure...


Blueberries

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Re: Venezuela Investing
« Reply #14 on: May 02, 2019, 11:36:26 AM »
Sounds like fun.  I hope you're not putting in any money you can't easily afford to lose, though.  I'd say Venezuela in 2019 is the whole country equivalent of buying penny stocks. High risk, high potential upside.
 

I generally agree with this.

@Blueberries what makes you think the investment is greater in India versus an overly-inflated country in Civil War like Venezuela?

India has the fastest growing economy in the world.  Much easier money, which is my preference.

It's more that India is stable, so it's less of a question mark.  Less risk, but less possible reward because Indian stocks are not in the middle of a fire sale.

My suggestion was purely based on India's growth.  I don't "value invest" anything but index funds; your reasons to purchase something will be vastly different from mine. 

theolympians

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Re: Venezuela Investing
« Reply #15 on: May 02, 2019, 07:14:38 PM »
Here is a "I knew a guy" story:

A friend of mine dated a gal from Venezuela 5 or so years ago (very rough estimation). She said, even then, Venezuelans were only allowed to move $1500 a year out of country. Their economy was heading towards the waterfall. I don't know how they would track that or stop it, it was just something to mention.

With that, if you put money "in" you may not get it back. Not only due to a poor investment, but gov't nationalization of private assets; which socialists are prone to do. If Maduro stays in power, I don't see much of an upside, as their economy will continue to grind down. You should be cheering for Guido. If he wins there is a chance to make money. Again, you have to pick the right investment.

Good luck!

Leisured

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Re: Venezuela Investing
« Reply #16 on: May 03, 2019, 01:14:42 AM »
As thesis pointed out: the problem is not just financial, it is also political and social. Venezuela and Norway are both big oil exporters, but the contrast could hardly be more stark. Norway is a politically stable, rich country, with a sovereign wealth fund which is growing, and Venezuela is a basket case where an oligarchy corners the income from oil. This oligarchy regards the Venezuelan people as wildlife with no call on the income from oil.

The chaos in Venezuela could continue almost indefinitely regardless of who is in power. Whoever is President needs the ability and the will to stamp out corruption.
 
Depressing.