A New Way To Invest in Chile

That was the case during the tech meltdown; the Chilean stock market hit its peak 15 months after the S&P 500 , and in the time it took the U.S. market to fall by half, Chile only dropped 20%. From peak to trough Chile did drop 40%, but it was on a different timetable. Anyone allocating into Chile in 2000 captured a significant and beneficial diversification effect when it was needed most.

Chile's economy has not changed that much since then, so the story could repeat again on the next go-round. If it does not, which is a absolutely possible, Chile's economy is still on a different cycle than the U.S., and the fundamental underpinning of demand for copper could stay in place for quite a while yet.

One last point: If demand for copper helps keep Chile afloat, shouldn't it do the same for Brazil, which is a much easier market to access?

The answer is that it does, to a point. But Brazil historically has been more volatile, both in terms of market movement and economic statistics. Chile could be a better place to hide out during a global downturn precisely because it is less visible and therefore less volatile.

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