Graduate School is a Bitch

I've been super busy with school the last ten days. I guess that's what I get for taking a mini-vacation. One more week and I'm done for the summer. Don't expect any new posts until then. I'd like to take this opportunity to drop the Brazilian ETF I trumpeted a few weeks ago, EWZ. The fund has lost 17 percent since my recommendation. Enough is enough. It's my belief that the problems we're seeing in the US economy has been spreading to the world economy; perhaps no country is safe. EWZ closed trading today at $56.62. I recommended it at $68.22.

I'll see you in a week or ten days. Be weary of the market!

A Pure Play on the Brazilian Economy

After perusing The Street, I came across an article written by Jonas Elmerraji which discussed ETF investing in South America, as well as Latin America. In the piece, Jonas suggests an ETF tied directly to the Bovespa stock exchange in Sao Paolo, Brazil:

"The ETF mirrors the MSCI Brazil Indes, an index that was designed to measure Brazil's domestic market equity performance. What that means is that EWZ essentially tracks the performance of the hundreds of Brazilian companies that trade on the São Paulo Stock Exchange."

"The ETF is heavily weighted in Brazil's key economic areas -- materials...and energy...as well as quickly emerging service areas, such as financials."

I think the Brazilian ETF, EWZ, is a splendid pick. The fund has gained 88 percent since a year ago. This fact certainly doesn't take away from the fact that the economy is still growing at a breakneck pace; in fact I think it will continue to do so. Jonas explains:

"Brazil has the most powerful economy in Latin America. The country manufactures everything from sophisticated turbine aircraft to orange juice, and it has a well-established professional services sector."

"Of the four BRIC (Brazil, Russia, India, China) countries, Brazil arguably has the most developed economy."

Mr. Elmerraji also notes that Brazil's infrastructure is superior to the other BRIC countries. So if Brazil has the lead in infrastructure and is the most developed economy of the four, why hasn't it seen the kind of growth that the Chinese stock markets has seen over the past five or so years? I think the economy, as well as the Sao Paulo stock market, has a ways to go before its growth slows down; thus my recommendation of the EWZ. The fund closed trading on July 17, 2007 at $68.22.

World Oil Demand

According to the International Energy Agency, demand for oil will increase at a greater than anticipated rate:

"...the International Energy Agency, which is based in Paris and advises 26 industrial nations, said that global oil demand would rise by an average of 2.2 percent a year from this year to 2012, up from a forecast in February of 2 percent annual growth from 2006 to 2011."

"The share of world oil consumption represented by the developing world, including emerging industrial economies, will rise to 46 percent of global demand by 2012 from 42 percent, the report said."

Given this information, it's a safe bet that oil companies heavily invested in the exploration and production of oil (upstream operations) will benefit greatly over the next five years. Chevron and Exxon-Mobil to name a few. It's also a safe bet to assume that developing countries could see nice runs in their stock markets. The Argentinian MerVal stock index could be in line to see nice returns. The Bovespa index in Brazil has already seen some solid gains and the Hang-Seng index in China has been going berserk; others may follow. All of this, of course, is contingent on whether or not the world enters an economic recession.
No recommendations for now - I'll update these companies and indexes when I can be more sure about where we are in the economic cycle.