Sunday, September 7, 2008

Investments in Brazil Since 2007

In recent weeks the USD has risen significantly after a lengthy decline. This, coupled with the withdrawal of funds from emerging markets by distressed financial institutions, among other issues, has cause the Brazilian stock market to drop recently. However, anyone who invested in Brazil since 2007 would still be far better off when compared with investing in the US markets:

Bovespa index on Jan 1 2007: 45,383 (US$21,221)
Bovespa index on Jan 1 2008: 62,815 (US$34,704)
Bovespa index on Sep 6 2008: 51,940 (US$30,096)

Bovespa performance in USD:

Since Jan 2007: +41.8%
Since Jan 2008: -13.2%

SPX performance:

Since Jan 2007: -14.1%
Since Jan 2008: -12.3%

While in 2008 the performances are comparable measured in USD, anyone who had invested in Brazil would far, far better off since 2007: +41% in Brazil vs -14% for the SPX.

In Jan 2007, in USD bought 2.13 R$. Today one USD buys only R$1.72. As a side note, US investors should note that the US market is a bit of an illusion. This is particularly true for those who thought that the US market went up in 2007. The gains were greatly due to the falling USD, which means, the USD buys less.

Those who own real estate properties (or even stocks) which have on top of it lost face value, have had even larger losses in real terms.

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