Portuguese stock picks

If you want some insurance against future Europe-US travel restrictions, want your children to have the flexibility to study/work/live in the EU, or just want to be like Eric Schmidt (support Biden and the Democrats’ plan to re-make U.S. society and the U.S. economy, but have the Gulfstream fueled and that second passport handy just in case!), the Portuguese Golden Visa program is an inexpensive path to an EU passport (less than $100,000 in fees and travel expenses). One requirement of the program is investing in real estate, which the Portuguese love and which I personally hate, or stocks, which the Portuguese hate and I love. The stock purchase approach requires more capital (1 million euro, versus as little as 280,000 for real estate that needs renovation), but is virtually guaranteed to be liquid.

(see Portuguese stocks or Lisbon real estate for the next five years? for some backgrond)

Friends of friends manage money or work in investment banking over in Europe. The general consensus was that Portuguese stocks aren’t mispriced and therefore there is no reason to expect them to do worse (or better) than German or U.S. stocks. That said, the stock market isn’t very developed in Portugal and it is perhaps easier for a management team to loot from shareholders.

Here are some notes from a guy who grew up in Portugal, but has spent his career as an investment banker in London and Spain….

Don’t buy real estate unless you want to use it. He bought in the center because he is fanatical about capital preservation. It took a long time to unload an apartment in Lisbon after the last crash.

Why has PSI-20 done so badly? Had same problems in 2001 and 2008 as everyone else. Bank blew up in 2014. Should be correctly priced now. They’ve survived hell and high water.

The PSI-20 has more exposure to Poland than Brazil or Angola, e.g., through JMT.

You’re in great shape with the large liquid components of the PSI-20.

  • JMT (10, great management, high growth) [the number is a rating from 1 to 10]
  • EDPR (world’s leading wind farm developer, incredibly management)
  • EDP (owns 65% of EDPR, cheapest right way right now to own EDPR)
  • GALP (4, local distribution company for oil, invested some into oil fields in Brazil, Angola, Mozambique, not especially well-managed)
  • BCP (6, only remaining bank, not especially well-managed, dirt cheap, too big to fail for system, largest shareholder is Chinese)
  • RENE (5, just the grid, regulated business, natural monopoly for electricity and gas, yield play)
  • SON (1, conglomerate, screw the minorities every single time, subsidiary is NOS and own that)
  • NVG (integrated paper manufacturer, Europe’s leader, very good management, very well run)
  • COR (10, one of the best companies I’ve ever come across, 50% of good wine[ry?])
  • ALTR (8, indirect way of owning, one of Europe’s most efficient [… something?])
  • CTT (6, post office)
  • SEM (85% of value is navigator, forget about them)
  • EGL (avoid)
  • PHR (avoid)
  • IBS (very nice company, KFC and Pizza Hut, they can grow)
  • Novabase NBA (great company, small IT provider, all software for Vodaphone, half of market cap is cash)
  • RAM (specialized steel and have a forest, properly managed and managed for you).

What if the Portuguese bank holding one’s securities fails? It is just like in the U.S. and the bank is only a custodian.

What did I decide to buy?

CompanySymbolWeight PSI-20Percent portfolio
J. MartinsJMT1325

The above is based on personal prejudice against banks (ruled out BCP), enthusiasm for Poland (overweight JMT), enthusiasm for electricity (overweight EDP; think of all the European douchebags needing to charge their Teslas!), belief that people are too lazy to cook and that table-service restaurants are unsustainable in a world of COVID-19 plus high labor costs (IBS).

Due to prejudice (observing the USPS!), I didn’t buy the post office, which is sad because they have great-looking trucks:

(2017 photo from the Azores)

Readers: Let me know if you need an introduction to attorneys and bankers over there.

40 thoughts on “Portuguese stock picks

  1. Thank you for providing this information. Can you give an approximate breakdown for the <$100,000 fees and expenses? What are the travel requirements (initial and maintenance)? Are there any downsides such as tax filing for maintaining dual passports? Not to make this political, but it seems like most of Europe subscribes to some degree of socialism that (I assume) you do not agree with. Do you think fleeing to Europe would be your best option?

    • I think it will be about $25,000 for legal fees by the time it is all done. And another $25,000 in fees to the government over there. I’m budgeting $50,000 for the required three trips to Portugal (5 weeks total over 5 years) and the rental of an apartment for Year 6 (you need to have some kind of residence there when you apply for a passport). You also have to take a language class and an exam to the A2 level (usually people can do this in about one month and, I guess, you could self-study rather than go to Portugal and take the class). I think the last $50k could be done cheaper, but we’re not on a super tight budget here and Portugal has a lot to offer as far as lifestyle goes. Stay in a luxury hotel in the Azores and hike. Stay in a luxury hotel in Porto and sightsee. Etc.

      Socialism? First, I think the word is being misused here in the U.S. to describe the Democrats’ dream of 55% of Americans (those who vote Democrat!) being able to live off the labor of the 45% (i.e., the Deplorables). In the canonical “socialist” system of the Soviet Union, every able-bodied person had to work. It was the polar opposite of the U.S. where there are all kinds of ways to thrive without working. Have sex with a dentist and harvest the child support. Have a child at age 17 and live for the rest of one’s days in public housing (plus Medicaid, SNAP/EBT, and Obamaphone). Become too busy consuming Medicaid-funded opioids to work, etc.

      If by “socialism” you mean high taxes, a lot of European nations have lower taxes than the U.S. Sweden, for example, has a lower capital gains rate than what prevails in CA or NY. The UK cap gains rate is 10 percent for entrepreneurs (see https://philip.greenspun.com/blog/2019/01/02/move-to-the-uk-if-youre-an-entrepreneur-10-percent-capital-gains-tax/ ). Estonia has 0% corporate tax rate (pay a lower rate than what we have here in the U.S. when the money is paid out as a dividend). As a U.S. citizen, of course, these lower rates aren’t advantageous because one will still have to pay U.S. taxes, but I mention them because I think it is unfair to say that Europe has bigger governments than the U.S. Except for France, the U.S. spends more on welfare than any European nation (percentage of GDP): https://www.washingtonpost.com/opinions/robert-samuelson-our-giant-welfare-state/2014/11/25/28f815bc-74c1-11e4-a755-e32227229e7b_story.html

      If by socialism you mean that the government provides a lot of services for residents/citizens, I think Europe is more socialist. The U.S. is kind of the worst of all possible worlds where tax rates are high and the money ends up going to lavish salaries for government workers, profits for government cronies, etc., rather than to useful stuff for the commoners. But it does vary a lot by state.

      No European government does anything as dumb as Medicare/Medicaid (write blank checks to hospitals, doctors, etc.).

    • Marcus: Europe has some cultural and lifestyle advantages over the U.S. You can definitely make more money faster in Houston than in Paris, but where would you rather live? Europe is also a better place to raise a family, I think, since they actually support the idea of a two-parent family. (Europe does offer no-fault (“unilateral”) divorce, but they don’t make it super profitable like we do in most U.S. states. Having sex with a high-income person without a marriage will typically yield only about $6,000/year in child support profits. See http://www.realworlddivorce.com/International ) A lot of European countries seem like better environments for children than the U.S.

  2. 1 million euros still sounds like a lot of money to invest in a passport, despite a parking space at Oracle park now costing $200/hour. Of course, you can always get the money back because modern monetary policy guarantees stonks go up.

    Not sure how a EU passport is insurance against any travel restrictions or why someone needs to travel that bad. Maybe it matters if you own an airplane & desperately need to find a use for it. The lion kingdom supposedly can move to Thailand, but maybe being a pureblood amerikan carries a feeling of constant risk the mudbloods don’t feel.

    • lion2: My friends with EU passports (or even Swiss passports) were going back and forth to Europe at times when Europe was closed to Americans. Usually they were going for business and sometimes to see family. In the spring of 2020 they’d often be one of 20 passengers on a huge Airbus. Unless nature runs out of viruses, I would expect a lot more border closures in the future (now that governments have seen how meek and timid the subjects are and how popular they can become by appearing to do something about a virus). Consider that even right now, the U.S. border is closed to Europeans #BecauseCovid, even as millions of never-tested and never-vaccinated folks walk over the Rio Grande into Texas. Somehow people accept the idea that the Swiss and Germans would bring the plague here, never someone fresh from a tent camp south of the border.

  3. When the world falls apart and you flee to a tiny country where you are the only guy in town whose family hasn’t lived in that town for a thousand years. Yeah that ain’t going to work. Without a government you better have a tribe, and parachuting into Portugal will not get you tribal membership. They don’t have to kill you they just have to not sell you food. I can see picking a different state but can’t see it being better outside of the states unless you are talking stupid money building fortresses in NZ. I’d guess even those guys are still dependent on the goodwill of locals. They just might not know it yet. When paper money is worth less than livestock you better be liked by a farmer.

    • GB: I don’t think we would be the only gringos in Lisbon! Separately, a Portuguese passport does not restrict a person to Portugal. That’s the beauty of the EU. Live in the Swedish Free State in the summer and Madeira in the winter!

    • philg: This is a rosy view of the EU. The EU still primarily exists a) to facilitate exchange of capital and goods for the rich and b) to quickly dispatch refugees to where they are needed for unskilled labor.

      Moving to another EU state is non-trivial even for citizens of a(n) EU country:

      You need a residence permit in the new country if you stay longer than 3 months and there are dozens of ways for the new country to squeeze you. E.g., if you have a health insurance in the old country that you’d like to keep, you have to pay public health insurance in the new country as well. This already is a showstopper for the middle class.

      There are numerous other disadvantages for the middle class connected with country hopping.

      (Also, of course, countries still hate each other, so you’ll have to deal with that, too.)

    • Phil does have a tribe and the tribe was kicked out of Portugal around 500 years ago, at least those that weren’t murdered or subject to focible conversion. In 2013 they were encouraged to return because Portugal needed their schkl’m. That is a very old pattern, kick the Jews out then ask them to return when you need their money. Maybe the next time around will be better but i doubt it. European countries are tribal, you don’t see that as a tourist going to art museums, concerts and nice restaurants but when things go south you will. That is the way it has always been & that is why we live in America.

    • Jack: Most applicants are Chinese and Arabs:


      “The vast majority of the 6,000-plus applicants granted visas so far are Chinese with those from the Middle East taking visas numbering in the hundreds.”

      And there is pushback on this sort of citizenship (the Greens are in power currently in Germany):


      Rationally, I don’t see any danger for Jewish people in Europe currently. Three scenarios would pose a threat: a) Islam gets too big, b) extreme right wing backlash against wokeness, c) extreme left wing takeover with some Stalin figure. But those are very unlikely — except for a) in 50 years.

    • Eurotrash: Thanks for the on-the-ground perspective. You need a residence permit to stay more than 3 months? Why can’t Europeans see that the American “just walk across the border and collect welfare forever” idea is optimum?

      More seriously, isn’t it easier for a German or Dutch company or university, for example, to hire a Portuguese citizen than it would be for them to hire a U.S. citizen? And isn’t it easier for an EU citizen to go to a university somewhere in the EU than it would be for a US citizen?

    • philg: Yes, it’s easier for a company/university to hire EU citizens and studying anywhere in the EU is relatively easy for EU citizens as well.

      For a working EU citizen, if he/she/ze/they wants to keep ties to two or more countries, the problems start. You do not know what country B is going to do in 5 years from now if it decides that it does not want too many foreigners (yes, e.g., a German in the Netherlands will always be a foreigner).

      In your case, if you can already spend a substantial amount of money for dealing with the Portuguese bureaucracy, it won’t be an issue. But you will need a high tolerance for dealing with paperwork. On the bright side, your blog is not going to run out of material if you move to Europe, so please do! 🙂

    • I am the living proof that you do not need a residence permit to live in a EU country if you’re a citizen of another EU country. You just have to exchange your driver’s licence for a local one (no exam needed), and register your car in the country of residence. In some countries you just have to tell some institution, maybe the police, that you’re there (“Anmeldepflicht” in Germany). I don’t know about medical insurance if you have no job, but I _think_ neither job nor residence permit are required.

      Thousands of Gypsies, citizen of Eastern European countries, live in the Western European countries and the latter have no legal means to send them “home”, no matter how they’d like doing it. Most get child support for their numerous children, legally.

      About socialism and taxes: I don’t know about taxes on capital gains etc. As a mere employee, in France I get 65% of my before-tax salary. VAT (value-added-tax, something like sales tax in the US) is about 20% in many EU countries. Gas is 1.6 EUR/litre (that’s about 6.15 EUR/US gallon). Healthcare is more or less free, as is education, payed leave is in excess of 25 days per year in almost all countries, and much more in some. Everything is more crammed than in the US. Houses for “normal” middle-class families are between 100 and 300 square metres (about 1000-3000 sq ft). Prices in capitals and world cities such as München may easily reach 10,000 EUR/square metre, so a 1000 sqare foot apartment costs 1 million euros. The impression that I’ve got when I lived in the US in 2004 was that it wasn’t great for poorer people, or young people wanting to have children (no maternity leave, very short payed leave, expensive education, at-will employment), but that it’s a country offering more than Europe to its middle-class, more space, more disposable income, more job opportunities. It felt better, individualism, personal responibility, no nanny-state.

      That everyone had a job in the Eastern Bloc is true. But that they _worked_ is not. “They pretend they pay us, we pretend we work”. After the fall of Communism Western companies moved in to acquire bankrupt communist companies. When they arrived they were suprised to find the highest number of employees per railway mile in Europe in the state-owned railway company, four-storey buildings full of engineers in all kind of companies, heavy industry companies producing unexportable steel of junk-quality, which the other Warsaw Pact countries had to buy, etc.

    • @Eurotrash: It was not my intention to have a Dutch name, I just stole the name from a fictitional character in some novel. I was a student 20+ years ago.

      The page you gave is about getting permanent residence. It begins with “you _may_ want to apply…”. It is not an obligation. Just to stay with the Netherlands example, here’s a link:https://www.government.nl/topics/immigration-to-the-netherlands/question-and-answer/do-i-need-a-residence-permit-if-i-want-to-stay-in-the-netherlands-for-a-long-period-of-time It says “Residence permit not required: You do not need a residence permit if you are a national of a European Union country”.

      It is not needed, it could be useful though. For example, as I have no French papers (but I’m legal) it’s more difficult to show proof of address. No matter where I need an ID, I produce my old country passport, but that one doesn’t show my French address (obviously). I show some recent energy bill. Another situation in which it is useful is in the old country, to show that you’re not living there any more. In Corona-times it is very useful: when the borders were more or less closed, one could have always invoked “repatriation” in one direction and again “repatriation” in the other direction when questioned at borders.

      I had an attempt at requesting the “permanent” French residence. (I’ve put “permanent” in quotes because the French call it “permanent” but it is limited to 10 years.) After waiting in line for about two or three hours and producing five years worth of salary slips, energy bills and tax declarations to prove continuous residence, the lady told me that they want the tax _assessment_ and not the tax declarations, as if the whole pile wasn’t sufficient evidence that I’ve been living here all this time. So I told her to stuff her permit.

      There are thousands of Brits living in the south of France or Spain and they had no French or Spanish papers (after Brexit that has changed for them).

  4. We have bicycles and not Teslas! Seriously, a car in larger cities is just a nuisance, because transport is excellent.

    • Don’t worry Eu, financial help from @philg is on its way..,. Maybe a scooter will become affordable again. All because our best and brightest MIT (ranked around #1-3 in the world) professors need some Barcelona soccer education

  5. IMHO Portuguese wine is the best in Europe, which is surely a top consideration when choosing a passport, so congrats!

  6. This Portuguese real estate/stock exercise sounds like its straight outta Zero Hedge, the US is doomed, lets panic and run from America.

    How about standing and fighting to save America.

    • Yes, EU is father down same path that US is traveling but US is accelerating. If US confirmed something like EU or as many expect much worse what hope the rest of the world has? It would be time a) to get tribal, b) to switch the tribe or in Philip case to c) join supranational world elites. Philip really hurting his chances of c) by criticizing ridiculous coronavirus rules for proles.

    • Tom: What does it “America” mean? Isn’t “America” whatever the majority votes for? As originally conceived, American voters were people who’d worked for about 8 years (men voted at 21 and would have likely started working at age 13). So “America” became a place that rewarded work. We’ve redesigned the voting system, however, as well as our society, so that “voter” is no longer more or less synonymous with “worker”. Someone who identifies as a “man” can vote starting at 18 and not get his first job until age 25 or 30 (living off parental support and/or soon-to-be-forgiven student loans while studying critical race theory, etc.). Someone who identifies as a “woman” can have sex with a dentist and live indefinitely off the resulting child support profit (at least in Massachusetts, California, Wisconsin, New York, etc.). Thus, we have tens of millions of voters drawn from among those who have never worked. Isn’t it inevitable that they’ll vote for an “America” that rewards something other than work?

      If you accept that there shouldn’t be any working history requirement to be a voter, America doesn’t need saving. We have exactly the America we would and should expect.

    • Philip, besides work US still has freedoms that are not that apparent in EU or UK, for example 1st and 2dn Amendments from the Bill of Rights and the rest of it. Somewhat impaired by “wokeness” but not yet to UK/EU levels.
      For your criteria for example China has both great working culture and good colleges. Did you consider getting Chinese passport?

    • LSI: The First Amendment, as we’ve seen in 2020 and 2021, does not apply any time a U.S. governor declares a one-year or longer “emergency.” I assume that the Second Amendment will soon be gone as well, now that gun violence is a public health crisis.

      China? Everything that I’ve said about the EU I would also say about China! Many of the world’s most interesting jobs are already in China. Imagine a child who is interested in manufacturing engineering. There would be no better place to go right now than China. The language is obviously a barrier, but I think everyone should probably live in China for at least a few years out of however many decades coronavirus leaves to the average human. A person who is ignorant of China is ignorant of about one third of human achievement? (This is my main objection to the current American obsession with race- and gender-related grievances. Time spent learning critical race theory is time that cannot be spent learning Chinese language, literature, and history.)

    • I think one of the absolute best jobs to have in America right now based on recent experiences on Facebook is:

      Skilled healthcare worker (like an RN or ultrasound tech.), preferably female, with a few years of experience, who has been vaccinated.

      I have a friend on Facebook who works at a large hospital in a Northeastern state. She posts at least three or four photomontages every day of places she has visited, wants to visit or is in the process of visiting. It’s almost as though she does nothing but travel and I don’t understand for sure how she really “works.” She talks about her “real job” sometimes and occasionally posts a picture, but then it’s right back to the Travel Agent photos.

      Recently she’s started posting even more targeted destinations where she wants to go – in places like the scenic areas of Alaska and the Gulf Coast of Texas – as a contract healthcare worker. She’s trying to figure out where she’ll have a better time and take better pictures.

      She wants to tour the entire United States, and because of her job and her “in demand” status right now she’s absolutely going to do it. It seems that she is at liberty to pick and choose wherever in the United States she wants to go, for as long as she wants to stay there, and get paid very, very well.

      She’s the New America. Vaccinated female ultrasound technician. If I’m not mistaken she’s also married to a retired police officer who collects a pension and now basically spends his time working on home improvements and driving around with her.

      By the way I know a guy who works for the Red Cross and is in a constant state of tourism driving around in a huge motorhome from one disaster zone to another being paid by the Red Cross.

      Believe me: you don’t want a job in a cubicle or even a Zoom job. You want a healthcare job where you get to go everywhere in the country, see incredible sights and live the good life.

    • Philip, I agree with much of what you are saying but you are escaping answer to Tom’s comment, US 1st Amendment is still stronger liberty of its European equivalent when people can be dragged to court and incarcerated for some of which you write on this blog and 2nd Amendment is still here, too early to bury, all successful American left populists of XX century, such as FDR and JFK, embraced it to further their political and social goals.
      Would you defend your existing freedoms? I guess you are and you would.
      Of course if federalism in canned and one party (which in current circumstances means radical left) rule in constituted then it is gone, as gone American experiment and who knows how many centuries would pass before something like this emerges again.
      By the way, hedging US by EU is like hedging GM by Ford, risky.

    • LSI: Your last point is excellent. Korea, China, and Taiwan would be better hedges against the U.S. becoming an undesirable place to live. But Korea, China, and Taiwan don’t offer straightforward processes to obtain passports! And remember that this isn’t primarily a doomsday scenario hedge. I am just thinking that at least one of our children might want to live in the EU for at least a few years.

      I think the California recall vote was a good proxy for what percentage of Americans are happy to surrender all of their Constitutional rights in exchange for a government promise of a slightly lower death rate. It turned out that a significant majority of Californians did not value liberty when balanced against a threat advertised to them by the ruler.

    • Philip, I would not read too much from one election in CA . You could be right but people vote basically on party vote and choose one from two even though in CA they have more candidates nobody is familiar with . I know some people who never wear masks but probably voted to keep Newsom. Even with CA coded in law ballot harvesting that in my and most other states opinions constitutes fraud, less then 8,000,000 votes to keep Newsom out 22,000,000 registered to vote Californians give no mandate to radically change way of life in California. And before referendum Newsom budged and re-opened California that you had to obey were you living there. And in political left’s stronghold of LA, LA county sheriff suspended Biden/Newsom mandates, guess he wants to be re-elected.

    • LSI: I suspect the university rankings are for research? MIT video courses are quite basic for what is taught in Germany or Eastern Europe. MIT professors explain better, though. Gilbert Strang’s Linear Algebra course makes a lot of valuable high level connections that make you see the big picture. But proofs are drilled more in Europe, at least at the undergraduate/masters level. Similarly, most proof assistants like Coq, Isabelle, HOL Light, are also from Europe.

      Generally, in Germany for example, the professor dumps material on you at a fast pace and you are supposed to connect the dots. You are treated as an adult. If you survive, you have a good education.

    • Eu, ditto on hardness of MIT classes available online. When I was naive and took MSc classes at night while working fulltime MIT midterm theory of computation problems that my prof copied to his test was way too easy. Disagree on proofs, they are often useless and sometimes dangerous. I was drilled on the proofs too and it made my mind less nimble. I say it is a type of brainwashing and there is no truth in them: each new “theory” is a repetition of same basic techniques that are applied to expanding concepts. It took me time to recover my childhood ability to attack problems from new angles and solve puzzles at will. The only proofs that I accept now are either those which result in efficient problem solving algorithm or works of beauty.
      I believe that world has continuum of new problems and drill on miniscule subset of them is idiotic.
      I did not make the ratings, I found one where MIT is rated the lowest, in English. You can check the ratings components. If you have German language ratings post a link.

  7. Everyone: Remember that NOT getting an EU passport for oneself and one’s kids is essentially a bet that the U.S. will be the best place in the world for oneself and one’s kids every year for the next 80 years. That doesn’t seem like a reasonable bet. During the last 1.5 years, for example, Sweden was a much better place to live than the U.S. (lower COVID-19 death rate; kids in school; hardly any restrictions on liberty justified under the #BecauseCOVID banner) For someone with a passion for saving Mother Earth, working for windmill market leader Vestas in Denmark might be the best choice. For someone interested in history, perhaps Italy or Greece would be the preferred place to live for a while. There are a lot of interesting people, great universities, and great companies in Europe.

  8. My daughter, who holds a PHD in Archeology and Classics, has dual citizenship in Italy courtesy of my grandfather who immigrated to the USA, but never became a legal citizen (thus preserving his Italian citizenship). By her accounts, the EU is no paradise concerning freedoms, and saddled with red-tape that makes getting a library card a headache. In some matters, foreigners have more freedom of movement than residents.

    • If the US is so much better than Europe in every respect, why aren’t a high percentage of Europeans seeking to emigrate? Presidents Biden and Harris opened the border, but it was Haitians who arrived in Del Rio, not Italians.

    • I should add that my daughter’s work takes her, not only to Italy, but also to Spain, Portugal, Greece and Croatia. The Italian passport is just her “ticket” so to speak.

  9. Hi Phil

    What if Trump is right and the election was stolen?

    You think as President he did not ask NSA or some other agency to monitor and record the election in real time?

    You think Trump was taken by surprise and is lying and does not have the proof?

    I’ll go with Trump’s word before State Run Media’s word any day.

    The game is far from over.

    • Joel: I haven’t been following Donald Trump (banned from most U.S. media for our protection?), so I’m not sure what Trump might have said.

      As noted above, a 19th century American would say that all of our contemporary elections are illegitimate because people who shouldn’t be allowed to vote are voting, e.g., people who never worked. The 2020 election was just an extreme example of that, in which people who couldn’t be bothered to get off their sofas either to work or to vote were invited to vote by mail. Is it surprising that the guy who promised to enable them to sit on their sofas and watch TV forever won?

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