The Drama of Brazilian Stocks: The Sucker, The Soap Opera and the Harlequin Romance of Business Journalism


Época Negócios (“Inspiration for Innovation”) this week: “He is the nightmare of the stock market: So as not to lose control of Cosan, businessman RUBENS OMETTO did the unthinkable: He listed his new company on the NYSE and now wants to delist the company in Brazil. He speaks out for the first time since the crisis began.”

If the financial sector in the developed world continues looking as bad as it does, expect a run for the exits in countries like Brazil. –FT, November 8

A follow-up to:

On the subject of stock market prognostication and Brazilian business journalism, José Paulo Kupfer writes recently:

Na onda das insistentes altas do mercado de ações brasileiro, cujo ápice mais recente foi, curiosamente, o estrondoso lançamento de ações da própria bolsa de valores local, reportagens incentivando uma tomada de posição mais agressiva em ações têm, aparecido com freqüência cada vez maior. A última dessas ganhou a capa de “Época”, a semanal das Organizações Globo, e é um caso clássico de jornalismo de turismo em tapete voador, dos quais as revistas de negócios são especialistas.

On the wave of consistent market highs in Brazilian stocks, who most recent apex was, curiously, the noisy IPO of the local stock market itself, articles urging readers to take a more aggressive position in stocks have appeared with greater frequency. The latest of these has just been featured as the cover story in Época, Globo’s business weekly, and is a classic case of the “flying-carpet tourist” journalism in which the business magazines here specialize.

I have never heard that phrase before.

Is it anything like my term, “nam myoho renge kyo journalism”? By which I generally mean journalism that engages, or induces the reader to engage, in some form of magical thinking?

One slight quibble with Mr. Kupfer’s analysis being to note that Época is a mass-market title, whereas Época Négocios is one of Globo’s top business titles. And it is, I agree, just dreadful:

Tomando como base a situação do mercado acionário brasileiro às vésperas da primeira eleição de Lula, quando os índices atingiram o fundo do poço – uma boa data, portanto, para esquentar percentuais -, o texto descreve situações mais apetitosas do que o passo-a-passo, com direito a fotos coloridas, daquelas receitas de restaurantes estrelados, irreproduzíveis nas cozinhas e fogões domésticos. Desfilam vários personagens – gente “comum” como todos nós –, cujo traço de união é o fato de terem ficado milionários, nos últimos cinco anos, a partir da aplicação de tostões na bolsa. Não aparece ninguém que tenha se dado mal, nem que fosse para entrar na história como a exceção que confirma a regra.

Taking the situation of the Brazilian stock market on the eve of the first Lula election victory, when the indices scraped rock bottom — a good date to choose, therefore, if you want to pump up the percentages — the article describes situations more appetizing than those step-by-step recipes, with color photography, from five-star restaurants, that prove impossible to reproduce in your kitchen at home.

Zing! Nice analogy!

Various persons — “common” folk, just like us — are paraded past, the only thing they have in common being that they became millionaires in the last five years by investing their pennies in the stock market. No one is shown who has done badly, not even as a case of the exception that proves the rule.

A reportagem coincide com uma outra, esta do “Financial Times”, com data de 3 de novembro, traduzida pelo UOL e na qual o jornalista John Authers chama a atenção para a irracionalidade que tomou conta do mercado brasileiro. Eis um trecho:

The report coincides with another, this one from the Financial Times, dated November 3, as translated by UOL, in which journalist John Authers calls attention to the irrationality that has taken hold of the Brazilian market. An excerpt:

“Cinco anos de mercado em alta depois, o Brasil apresenta valorização de 1.600% em termos de dólares, e o valor de oportunidade desapareceu. O Brasil agora negocia quase no mesmo P/L da S&P 500: 17,8.”

“Five years of a bull market later, Brazil has appreciated 1,600% in dollar terms, and the opportunity premium has vanished. Brazil now trades with nearly the same profit-loss margin as the S&P 500: 17.8.”

Skipping ahead a little in the translated FT excerpt, which I should probably just find and link to:

A própria Bovespa flutuou na semana passada, se tornando a primeira bolsa de valores listada na América Latina. Sua capitalização de mercado, após uma forte estréia, é atualmente de cerca de US$ 13 bilhões. Em comparação, a Nasdaq vale apenas US$ 5,2 bilhões.

The BOVESPA issued an IPO last week, becoming the first Latin American exchange to do so. Its market cap, after a strong opening, is nearly US$13 billion. In comparison, the Nasdaq is valued at just US$5.2 billion.

Skipping ahead a bit more:

Há todos estes sinais claros de que algo irracional está em andamento. Apesar de toda sua perspectiva positiva a longo prazo, nada no Brasil em si pode justificar a fé que os estrangeiros estão depositando nele.

“These are all clear signs that something irrational is going on here. Despite its positive long-term outlook, there is nothing in Brazil per se to justify the faith foreign investors are depositing in it.

Se o setor financeiro do mundo desenvolvido continuar com aparência tão feia, espere uma corrida para as saídas em países como o Brasil.”

“If the financial sector in the developed world continues looking as bad as it does, expect a run for the exits in countries like Brazil.”

End FT excerpt.

Pode ser que a corda ainda tenha um determinado número de metros para esticar. Mas é óbvio que já está para lá de puxada. E isso caberia à mídia ressalvar.

The cord may still have a few more meters of stretch in it. But it is obviously stretched quite far already. The media ought to emphasize this point.

Como diz Warren Buffet, megainvestidor em ações e segunda maior fortuna americana, citado na mesma Época, ainda que seu conselho não tenha sido levado em conta pela revista no texto principal da reportagem de capa, “a maioria das pessoas se interessa por ações quando todo mundo está interessado, mas o momento de se interessar é quando ninguém está interessado”.

As Warren Buffet … says, as quoted in the same issue of Época, although the magazine does not take his advice in writing its cover story, “Most people get interested in stocks when everyone else does, but the moment you should get interested is when no one else is.”

Mercados não vivem sem três personagens: investidores patrimoniais, especuladores e otários. No Brasil, a mesa está posta para os otários caírem na armadilha.

Markets cannot thrive without three players: Professional investors, speculators, and suckers. In Brazil, the table is set for the suckers to fall into the trap.

I was just talking with a friend of ours recently along the same lines.

I have, and claim, absolutely no authority as a giver of concrete investment advice, mind you. Buy or sell Vale do Rio Doce or CSCO? I have not the foggiest idea.

But when she started talking about getting into day-trading rather than continuing the revival tour of her all-girl punk rock band, I did feel duty-bound to point out the general drawbacks, including the ones just mentioned.

As I keep telling Neuza, with the wave of credit made available with falling bank rates, and the historic cross of the fixed income and equities yield curves, it will be interesting to see how effectively regulators and self-regulators stay on top of the inevitable wave of little old ladies emptying their piggy banks, dazed by the siren song of some financial scammer.

The new management at the CVM — the Tupi SEC — actually seems mindful of these risks to the public, and inclined to address such issues. Which seems like a good thing. Putting principles into practice, of course, is the hard part, and what people like that deserve to get the big bucks for.

One CVM initiative causing some controversy, for example: Targeting sleazy journalistic pump and dump for hire. This is a Stalinistic intrusion on journalistic freedom of expression! See

IstóE Dinheiro this week, meanwhile, tells a quite different story, more in keeping from the “rats from the sinking ship” narrative Veja was selling last week.

It does seem a bit like a case of telling one story to the predator (the rats are abandoning the sinking ship!) and another to the prey (there is plenty of nice things to eat inside that gingerbread house!).

I cannot bring myself to actually read much of this stuff, though. I would prefer to go read the COSAN story in inverted-pyramid style. Who, what, when, where, why and how. Bip, bam, boom.

I have no patience for the hackneyed trappings of “autohagiography by proxy” — the “Harlequin Romance of business journalism” — in this treatment of the heroic contrarian, leading the vanguard of those ship-abandoning rats.

I have no idea who this guy is, by the way, or what Cosan does. I should really find out, for my personal notes on the whos and whats of Tupi biz.

O empresário Rubens Ometto Silveira Mello, 57 anos, controlador do grupo Cosan, adora telenovelas. Grava, diariamente, as novelas das 6h, das 7h e das 8h, para assistir depois do trabalho. Para ele, o que há de melhor no gênero é a imprevisibilidade. “Quando uma novela começa, você nunca sabe se vai ser boa ou ruim”, afirma. São cerca de 19 horas de uma segunda-feira, 8 de outubro, e Ometto, de terno azul escuro e gravata bordô, está terminando sua primeira entrevista à imprensa desde o final de junho, quando a empresa que ele dirige anunciou uma profunda, inesperada e controversa reestruturação acionária. O local é a sala de reuniões da Cosan, no sexto andar de um edifício comercial na avenida Juscelino Kubitschek, em São Paulo. Ometto fala pausada e firmemente, olhando direto nos olhos do interlocutor através dos óculos de aro metálico.

Businessman Ometto, 57, who controls the Cosan group, loves soap operas.

A personal detail is selected and used as a kind of literary leitmotif for the entire piece.

The personality sketch and physical description are used in the service of the notion that the strategy flows from the soul of the man — the heroic, John Galt-like individual.

The dramatic build-up, focusing on the personality of the interview subject, takes forever.

You are not likely to get the actual basic facts of the business case until you have flipped through several glossy full-page ads and followed a jumpline or two (cont’d on p. 47).

Classic Institutional Investor-style “executive as celebrity” formula.

You could practically program a computer to generate this kind of prose automatically, I think, like that machine-generated academic paper that got accepted by an academic journal a few years back.

See, for example,

The narrative throughline there: “Carlos Slim identifies with the great modern masters he collects.”

You have to hack your way through the hoary clichés with a machete, like pith-helmeted explorers in a Tarzan movie.

Every day, he records the 6, 7, and 8 o’clock soaps to watch after work. In his view, the best part of the genre is its unpredictability. “When a soap starts, you never know whether it is going to be good or bad,” he says. It is around 7 pm on October 8, and Ometto, in a dark-blue suit and wine-dark time, is wrapping up his first interview since late June, when the company he runs announced a profound, unexpected and controversial share restructuring plan. The location is the COSAN conference room, on the sixth floor of a commercial building on Kubitschek Ave., São Paulo. Ometto speaks firmly, with frequent pauses, looking straight into his interlocutor’s eyes through metal-rimmed glasses.

Most of that paragraph could be cut in favor of a photograph of the subject taken during the interview.

The man’s interest in soap operas is not really of any interest at all, unless your boss happens to produce soap operas.

Nos últimos meses, por uma dessas peças do destino, o usineiro paulista converteu-se, ele mesmo, em protagonista de uma trama quase novelesca. Sua companhia, uma gigante de expressão global nos mercados de açúcar e energia, está no centro da maior e mais ruidosa polêmica já produzida no Novo Mercado, o segmento da bolsa de valores criado em dezembro de 2000 com intenção, entre outras coisas, de dirimir disputas acionárias. Assim como nas novelas que Ometto aprecia, a controvérsia atrai enorme atenção, é acompanhada de perto por uma platéia vigilante e, a rigor, não se sabe qual será o seu desfecho.

In recent months, in one of those twists of fate, the São Paulo factory owner himself became the protagonist in an almost soap-opera like plot.

See what I mean?

“Life imitates (trash) television!”

That is about enough of that, I think.

Compare

Rohter channels the ghost of Oriana Fallaci in celebrating the legendary life of Toninho Malvadezas:

To both his admirers and his many enemies Mr. Magalhaes seemed a larger-than-life figure, like a character out of one of the novels of his friend Jorge Amado. On the campaign trail, he seemed equally at ease with the black voodoo priests who repeatedly delivered their congregations’ votes to him as with the white businessmen he made prosperous by steering lucrative contracts their way.

Always with the black voodoo priests (though candomblé, not voudon, is the characteristic Afro-Brazilian religious expression in Bahia.)

From Rohter’s his 2001 series on the “monied Marxist sexologist” mayor of São Paulo at the time, and her “troubled love life”:

The 10 million residents of Brazil’s biggest, richest city were convinced that the days of political soap operas here had finally ended when Marta Suplicy became mayor at the start of the year. Little did they suspect that they were about to plunge into a new, even more complicated drama mixing political and sexual intrigue.

It is interesting to note how frequently this sort of personalism, or personality-driven approach, is used in the service of one of the two extremes: (1) hagiography, or (2) demonization or demoralization.

The fact is, however, that what this sort of journalism, like the Globo soap opera — the interview subject plugs the entertainment products of the company that it is interviewing him! — really appeals to is an appetite for comforting, formulaic sameness, not for genuine originality or suspense.

My wife explains it this way: The satisfaction lies not in the plot itself, but in the unfolding of the same formulas in time, over and over again. In the sameness of the narrative dynamic, and the familiar universe of stock characters, that underlies the superficially novel incidents set in different places and times (but mostly in the contemporary Zona Sul of Rio de Janeiro).

It is the process itself that gives pleasure, which is really more a sort of comfort.

She likes to compare it to the pleasure of smoking cigarettes or taking a Xanax.

Was anyone actually surprised, for example, to see the last Globo soap featuring the same actress playing identical twins, one of whose murder drives the plot? One twin good, the other evil? (Ah, but which is which?)

Was anyone all that surprised when the guy who turned out to have done it was the most famous and well-paid actor in the cast, the one getting them most money? (And about to bust out as the star of the year’s hottest film, Tropa de Elite?)

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