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Brazil has been a much-discussed topic in investing circles for some time now, and having just returned from a recent trip there, I am eager to share with
subscribers my "boots on the ground" notes and perspective.
It was instructive and fascinating to be a front-and-center spectator not only of the vibrancy of Brazil's blossoming economy and free market, but also of its captivating and energetic culture. Contrary to what Charles de Gaulle of France once wryly described as "not a serious country," the largest nation in South America, with a population more than 190 million people, is quickly becoming not only a regional powerhouse, but a major player on the global stage.
In this multipart look at Brazil, my aim is to shed some light on where we are in the Brazilian growth cycle; to break down my trip, with regard to the many investment opportunities available; and I'll finish with a personal anecdote summing up the overwhelming challenges of its ugly legacy of crime and corruption.
China Watch: Brazil's One Way In (Video)
One way to get in on the action with China is to play Brazilian companies with Chinese connections. Patrick Schultz reveals how we can play one emerging market to play another.
To watch the video, click the player below:
Plus, don't miss China Watch Mail Bag: Best Brazil Bets.
Brazil has a wide range of investment opportunities, but to understand where it can go, a few facts are necessary to appreciate where Brazil has been. With so much fawning over China and India, it may surprise many that the benchmark
is the best-performing index of all the emerging-market BRIC countries on year-to-date and two-year time frames.
||Two years ago
||Year to date
|| YTD date %
|Brazil -- Ibovespa
|India -- BSE Sensex
|China -- Shanghai Composite
|Russia -- RTS Index
I believe Brazil is a country that's just starting its upswing. I don't fear the rapid boom followed by the fated and ugly bust that has plagued this country for decades. I believe Brazil is still in the early innings of a powerful global game of wealth creation.
This early-cycle investment thesis around Brazil -- let's call it "early capitalistic investing" -- is rooted in four basic pillars: arable land for agriculture, commodities for basic materials, oil from massive offshore discoveries and environmental expertise in ethanol and flex-fuel technology.
These secular drivers are still budding, and their stocks are in rip-roaring bull mode. I see no material drop in global demand for any of these pillars of growth (think China, India, Russia, Africa). If anything, I see demand increasing.