The “Asian Tigers” Revisited

Today, it’s the BRIC economies of Brazil, Russia, India, and China that are all the rage. Yet 15 years ago, it was another group of four economies — Taiwan, South Korea, Singapore, and Hong Kong — that were attracting the attention of global investors.

The Asian Tigers became the first group of developing countries to successfully transform themselves between the early 1960s and 1990s from economic backwaters to cutting-edge global economic powerhouses. Today, the original Asian Tigers have become substantial global economies on their own, with South Korea boasting a GDP of $929 billion; Taiwan $699 billion; Hong Kong $215 billion; and Singapore $182 billion. Taken together, the Asian Tigers boast an economy worth more than $2 trillion. That would make them, together, the eighth-largest economy in the world.

Put another way, the Asian Tigers generate about 50% of the economic wealth that China does, with only 6% of the population.

Understanding the reasons behind the success of the Asian Tigers is a key to identifying which countries in the rest of emerging East Asia — Indonesia, Malaysia, the Philippines, Thailand and Vietnam — will be successful in generating the outsized investment profits that investors enjoyed over the decades of their emergence.

The Remarkable Rise of South Korea: The “Miracle on the Han River”

If there is a first among equals within the Asian Tigers, it is South Korea. 

Half a century ago, South Korea’s economy was as poverty stricken as Upper Volta. Today, South Korea has transformed itself into the world’s 10th-largest economy. Thanks to the “miracle on the Han river” — named after the river that runs through its capital, Seoul — per capita annual income grew from US$87 in 1962 to US$24,800 today.

Infrastructure in South Korea is excellent. The streets are clean. The roads are smooth and fast. Buildings are modern. The trains and buses run so frequently, you never have to wait. Seoul’s Incheon International Airport recently was rated as the top-performing airport in the world for the fourth-consecutive year. South Korea also is the most “wired” country in the world, with 93% of South Korean households receiving broadband, and free Internet access is available on trains, on buses, and in taxis.

Since its inauspicious beginning, Korea transformed itself into a world leader in shipping, semiconductors, digital displays, and consumer electronics. It was only a decade ago when Japanese companies like Toyota and Sony were leading the pack in quality and innovation. Today, Samsung, LGE and Hyundai have taken on that mantle. Once the butt of late-night TV jokes, Korean automobile manufacturers such as Hyundai have surpassed German rivals Mercedes and BMW in quality surveys.

There is no higher-profile emblem of South Korea’s success than consumer electronics giant Samsung. If yesterday belonged to the Sony Walkman and PlayStation, today belongs to Samsung’s dazzling array of high-tech gadgetry. Today, Samsung has sales of $120 billion — more than double that of Microsoft — along with a reputation for making hip and sophisticated mobile handsets, MP3 players, televisions, and digital cameras. Samsung ranks ahead of Japan’s Sony in televisions and trails only Finland’s Nokia in mobile phones, recently having overtaken Motorola. Samsung’s stock market capitalization, at over $110 billion, is more than three times that of Sony and is second only to Apple among consumer electronics companies.

The Remarkable Rise of South Korea: Putting Money in Your Pocket

While stories of Asian growth are good, it’s money in your retirement account that really matters.

And here it’s worth taking a hard look at the numbers…

Consider if you had invested $10,000 in the iShares MSCI South Korea Index (EWY) on the day of its launch back in May of 2000, versus investing the same $10,000 in the U.S. S&P 500.

Had you stuck with the tried and true advice of investing in a U.S. index fund, your $10,000 would be worth $9,360 today. Put the same $10,000 to work in the South Korea index fund, and you’d be sitting on an impressive $26,305. That’s an eye-popping 2.8x difference.

And how has South Korea performed since the markets bottomed back in March?

Quite well, thank you…

In fact, since I recommended the iShares MSCI South Korea Index (EWY) to subscribers in my monthly investment service, Global Stock Investor, it is up close to 20%.

It’s also the reason that I keep the bulk of my own money-management clients at my investment firm Global Guru Capital in foreign assets, including iShares MSCI South Korea Index (EWY) .

The Lesson Is…

Thanks to the explosion of exchange-traded funds (ETFs), you, too, can profit from the emergence of South Korea as the #1 Asian Tiger on the world’s economic stage, as well as the remarkable rise of other foreign economies and companies over the coming decades.
And today, it’s as simple and as easy as clicking on a mouse…


Leave a comment

Asian Tigers Revisited: The “Other China”

Economically, Taiwan is the success story that mainland China could have been — absent the millstone of 60 years of Communism. While most resource-rich countries like Brazil and Russia pump finite natural resources out of the ground to turbocharge their economies, Taiwan has accumulated its breathtaking, $348 billion in foreign currency reserves — the fourth-highest total in the world — the old-fashioned way. Taiwan earned it. Had mainland China (population: 1.3 billion) been as efficient as tiny Taiwan (population: 23 million) in accumulating dollar reserves, China’s reserves would stand at $19.66 trillion — an amount almost 40% more than the entire U.S. gross domestic product (GDP).

Understanding the dynamics behind Taiwan’s remarkable success — as well as its strong prospects — just might alert you to one of the most profitable global investment opportunities over the coming decade.

The “Other China”: Relations with Mainland China

Taiwan has been independent for 60 years since the end of a civil war with China in 1949. American-inspired land reform, aid and investment, and free universal education helped turn it into one of the four original “Asian Tigers,” widely admired for their economic achievements. Thanks to both hard work and a market economy, Taiwan today boasts the world’s second-tallest building and its high-tech industry rivals that of the Silicon Valley.

For all its individual achievements, mainland China views Taiwan as a renegade republic. Yet, for two sworn political enemies, Taiwan and China could hardly be closer. Indeed, the Chinese and Taiwanese business and political communities exist in parallel, non-overlapping universes. Mainland China is Taiwan’s No. 1 export market, with nearly 40% of its exports going to China. Trade between mainland China and Taiwan reached $120 billion in 2008. And mainland China has attracted more than two-thirds of Taiwan’s foreign investment. More than 70,000 Taiwanese companies have invested $120 billion in mainland Chinese businesses since the early 1990s. Taiwanese companies employ some 10 million people in China. More than 300,000 Taiwanese businessmen and their dependents now live in the greater Shanghai area alone. The next time you see “Made in China” on your new computer, realize that the profits are probably going into capitalist Taiwanese coffers.

The “Other China”: The Time Is Now

Relations between Taiwan and mainland China have improved dramatically with the election in Taiwan of a pragmatic new president Ma Ying-jeou, of the opposition Kuomintang (KMT) party, in 2008. Within three months of Ma Ying-jeou’s election, direct flights between China and Taiwan resumed for the first time since 1949. Mainland China agreed to halve the number of missiles that it has pointed at Taiwan from 700 to 350. Taiwan and China agreed to end a ban on Chinese investments in Taiwan for the first time in 60 years.

A report published by the Ministry of Communications in 2004 makes plans for a highway from Beijing to Taipei, Taiwan, to be completed by 2030. The technical challenges of crossing the 94-mile Taiwan Strait aside, the document fails to discuss the even bigger political problem of reaching an agreement with Taiwan. But in Chinese officials’ minds, Taiwan’s reintegration into China is a question of “when” and not “if.” And that spells the biggest re-rating opportunity in all of Asia.

The “Other China”: Putting Money in Your Pocket

Unlike South Korea, the Taiwanese stock market has not been a terrific performer over the past decade, under performing even the anemic S&P 500. Ironically, that all changed during the Great Recession, which coincided with a warming of relations between Taiwan and China.

While the U.S. markets have had quite a run since last March, Taiwan has outperformed over the last 12 months by almost two-to-one.

And if you want evidence of a global economic turnaround, look no further than Taiwan. Its industrial output soared an eye-popping 47.34% in December as the island exited its worst-ever recession.

The bottom line? The once-in-a-lifetime, re-rating opportunity of “the other China” might be one of the top opportunities of the coming decade. That’s also why I have invested in the iShares MSCI Taiwan Index (EWT) for my clients at my investment firm Global Guru Capital. And now there is no reason why you can’t do the same.

Leave a comment

The Surprising Truth about Investing in the BRICs

A strange thing has been happening in global markets over the past month or so. As the U.S. recovery gathers pace, the U.S. stock market is beginning to outperform its high-growth global rivals.

While most investors — myself included — take it for granted that most global stock markets will outperform the United States year after year, that just may not turn out to be the case in 2010.

A quick glance at the 12-month charts, comparing the performance of the MSCI Emerging Markets Index and the U.S. S&P 500, confirms that the United States is now running neck and neck with red-hot global markets.

In fact, with a bit of a year-end rally, there is a slight chance that the U.S. market will have outperformed emerging markets this year.

S&P 500 Versus the MSCI Emerging Markets Index

The results are even more surprising if you compare the performance of the S&P 500 to that of the BRICs — BrazilRussiaIndia and China.

It turns out that as of about two weeks ago, the U.S. S&P 500 now actually is outperforming its high-profile BRIC rivals over the past 12 months.

S&P 500 Versus the MSCI BRIC Index

“Who’d have thunk it…?”

But investing in today’s media darlings has little to with making money in the financial markets. It turns out that the best places to make money over the long term are ignored — or even treated with distain — by the mainstream press.

Investing in the BRICs: Some Surprising Results

There’s no better example than China. While those who visit Shanghai and Beijing rave about China’s soaring skyscrapers and dynamic economy, you couldn’t tell all that from the performance of the Shanghai Stock Exchange in 2010.

In fact, despite its recent rally, Shanghai’s index — carrying the millstone of inefficient Chinese state-owned enterprises — has underperformed the S&P 500 by a wide margin.

Going into the final stretch of 2010, Shanghai has lagged its U.S. rival by more than 20%.

S&P 500 Versus Shanghai Composite

That doesn’t mean some investors have not made money in the dozens of edgy, small-cap Chinese stocks that have come to market in 2010. And investors in theiShares FTSE China 25 Index Fund (FXI) will have eked out a small gain. But even as China has overtaken Japan as the world’s second-largest economy in 2010, Shanghai is likely to end up the worst-performing, major emerging market of 2010.

Brazil tells a similar story. After a relentless rise that far outpaced the United States for many years, Brazil’s Bovespa barely has finished in the black for 2010. In fact, if you are a U.S. dollar-based investor who invested in the iShares MSCI Brazil Index (EWZ), you’ve actually lost money in 2010.

S&P 500 Versus iShares MSCI Brazil Index (EWZ)

India is only slightly better. Although India’s stock market has outperformed the United States over the past 12 months, Mumbai and New York have run neck and neck over the last six months, with the race “too close to call.”

S&P 500 Versus BSE 30 Sensex

But it’s the final member of the BRICs, Russia, which is the most surprising.

Russia, after all, is the ultimate “hate country.” After the collapse of 1998, one investor famously declared: “I would rather eat nuclear waste than invest in Russia.” Jim Rogers and George Soros agreed with the assessment of Warren Buffett’s partner Charlie Munger, who said, “We don’t invest in kleptocracies.”

Yet for all of the bare-chested shenanigans of Russia’s Prime Minister Vladimir Putin, Moscow’s show trials and the country’s famous corruption , Russia has been by far the best investment among the BRICs over the past decade, clocking up a Warren Buffett-beating, 25%-plus annual returns since its collapse in 1998.

And it looks like Russia is just about to match that historical average in 2010 as well, comfortably outperforming the S&P 500 by a 2:1 margin.

S&P 500 Versus Market Vectors Russia ETF (RSX)

Russia is the Top-Performing BRIC — Something Fishy?

Beyond the BRICs

The top-performing global stock markets of 2010 were in countries probably not on your radar screen. Although the final decision still is out on whether it was 2010’s #1 performer, one country stands out for its resilience throughout the year.

Earthquakes notwithstanding, free-market maven Chile — a long-standing recommendation in my trading service Global Bull Market Alert through the iShares MSCI Chile Investable Mkt Idx (ECH) — certainly will end up among the top-performing stock markets of 2010.

It’s worthwhile seeing how this small country has outperformed not only the U.S. S&P 500 over the past two years, but BRIC star Russia as well.

S&P 500 Versus iShares MSCI Chile Investable Mkt Idx (ECH)
and the Market Vectors Russia ETF (RSX)

So, what’s the takeaway?

As China’s example shows, fast economic growth and growing heft in the global economy do not necessarily translate into top investment gains.

In China’s case, it’s been quite the opposite.

And it is highly ironic that it is the most corrupt and most hated market in the world that has delivered the best performance among the BRICs. And with a compound annual growth rate close to 25% per year, among the BRICs, no one comes close to Russia.

And it’s hard to argue with the numbers…

So, if you really want to turbo-charge your investment profits, ignore the headlines and expand your investment horizons beyond media darlings China, India and Brazil.

Your portfolio will thank you for it…

Leave a comment

Asian Tigers Revisited: Asia’s Overachiever

If Singapore were a college student, it’d be the iconic student-athlete — a polite, white-bread, high-school valedictorian, a two-sport college athlete, who is also top-ranked Division I running back, a Heisman trophy finalist and a future NFL star — a Toby Gerhart among countries.

Indeed, the number of times that Singapore appears at the top of global economic rankings is nothing short of astonishing — and kind of annoying. Singapore ranks #1 in global innovation and competitiveness. It’s ranked first for having the most open economy for international trade and investment. And it’s the world’s easiest place to do business. And unlike, say, a (lucky) trust-fund country like Norway which pumps its wealth out of the ground, Singapore achieved all this by dint of sheer hard work. Over the past 40 years, Singapore has transformed itself from an economic backwater to an Asian Tiger success story. When this former British colony became a fully independent country in 1965, its per capita GDP was a lowly $511. Today, that figure has risen to $53,192, making Singapore wealthier per person than the United States.

So, if you believe that betting on the perfect kid is a worthwhile investment strategy, you could do worse than to include Singapore in your investment portfolio.

Asia’s Overachiever: Getting the Basics Right

A city-state at the tip of the Malay Peninsula with a population of just over 4.8 million, ironically, the secret to Singapore’s success is the diametric opposite of the individualistic, entrepreneurial-driven, quintessentially American success story of Silicon Valley. Singapore’s authorities are famously interventionist, having power to prosecute people who violate laws relating to “improper use of the Internet.” They once even famously banned the sale of chewing gum.

Its positively un-American approach to economic development notwithstanding, Singapore has gotten the basics right. And Singapore’s low levels of corruption, skilled workforce, stable environment, and efficient infrastructure have made it arguably the greatest economic success story among the Asian Tigers. Corporate tax is a mere 17% and personal taxes are only 20% on incomes over $300,000 Singaporean dollars ($213,000). In the midst of the Great Recession, unemployment never hit higher than 3.4% –a figure unimaginable to most Western economists. Recently, Singapore also has become the world’s fastest-growing offshore banking center, and its strict bank secrecy laws and a favorable tax regime have put the country on track to become the 21st century’s answer to Switzerland.

Not that it’s been clear sailing for Singapore over the past decade. Since the 1997-98 Asian financial crisis and the sudden downturn in world trade in 2001-02, the government has intensified its efforts to nudge Singapore toward a “knowledge-based” and service economy. During the 1990s, Singapore was the world’s leading producer of disk drives. Today, like its neighbors, Singapore is facing the loss of competitiveness against China. That’s why the philosopher kings of Singapore have embarked upon a mission to promote Singapore as a premier tourist destination.

Singapore was hit hard by the global economic downturn, but has bounced back quickly. In the second and third quarters of the year, GDP rose by nearly 9% and has now made up all but 1.8% off its peak. Property values have soared, forcing the government to take steps to prevent possible asset bubbles. Singapore’s economy likely will expand at a rate of 6.5% in 2010 — a rate virtually unheard of for a country already this wealthy.

Asia’s Overachiever: Path to Stock Market Profits

While the U.S. markets have had quite a run since last March, Singapore has outperformed the S&P 500 over the last 12 months by almost two-to-one. Since the market bottomed in March of 2009, the iShares MSCI Singapore Index (EWS) is up an eye-popping 114%.

While the headlines blare about China’s and India’s economic achievements, Singapore just might be the single most under-appreciated economic success story on the planet. And you too can take part in the fruits of this Asian Tiger’s remarkable economic success by investing in the iShares MSCI Singapore Index (EWS) ETF.

As annoying as Asia’s Overacheiver can be, it’s hard to argue with success — and profits.

Leave a comment

Latin America’s Chile: A Top Stock Market Performer

It was only 1o months ago that Chile was hit by a magnitude 8.8 earthquake, the fifth-strongest ever measured in the country. The good news is Chile’s capital, Santiago, located about 200 miles northeast of the quake’s epicenter, avoided the worst of the disaster. Electricity was quickly restored to 80% of the city. The airportresumed operations and several shops opened for business on within a day. The Chilean stock market resumed its relentless trek upward without a hitch.

Chile: Free Market Reforms + Discipline = Economic Success

Unlike Greece or other countries on Europe’s periphery, Chile has been a model for how a small developing country should conduct its economic affairs. This country of nearly 17 million people, with an economy about the size of Alabama, is arguably the most economically successful and certainly, on a per capita basis, the wealthiest country in Latin America.

Understanding the reasons behind Chile’s economic success can help you identify other countries in the world that are getting the basics right — and, like Chile, are the source of stock market profits that put the U.S. S&P 500 to shame.

Despite its impressive achievements, Chile’s success has been a quiet one, with few countries seeking to duplicate the “Chilean Miracle.” Chile first introduced free market-oriented reforms with the help of the “Chicago Boys” — a group of University of Chicago-trained economists — during the bad old days of August Pinochet’s military government in the 1970s. The first democratic government of Patricio Aylwin — which took over from the military in 1990 — continued with these economic reforms, as have successive governments since then. The impact of these reforms became crystal clear as Chile’s economic growth rates began to outpace that of its Latin American rivals almost overnight.

Chile’s growth in real GDP averaged 8% during 1991-1997, rivaling that of the Asian Tigers. Although it fell to half that level after the Asian financial crisis in 1998, Chile’s economy recovered, boasting growth rates of 5-7% for most of the past decade — considerably outstripping growth rates in neighboring Brazil. By 2006, Chile had the highest nominal GDP per capita in Latin America. And recently, it was the first Latin American country to join the OECD, an exclusive club of “developed nations.”

What’s most impressive about Chile is that it has stuck to its reforms through thick and thin — a discipline that is sorely lacking in recent U.S. administrations. After being elected in 2006, President Bachelet took a lot of flack when she failed to succumb to pressure to spend Chile’s windfall earnings from high copper prices. The “Great Recession” of 2008 and 2009 revealed the wisdom of her policies. When the global financial crisis set in, government coffers had the cash to implement one of the world’s largest stimulus plans. The ant prevailed over the grasshopper, yet again.

Skeptics point out that for all the importance of free-market reforms, Chile wouldn’t be this far along without its huge reserves of copper. Copper accounts for about one-third of the government’s revenue and, as the world’s third-biggest producer of copper, even a small stumble in Chile’s copper production due to the recent earthquake sent global copper prices soaring.

But ideas do matter. What copper is to Chile, oil is to Venezuela. Yet, Venezuela is an economic basket case. Contrast the economic fates of Latin American countries that invoked the name of Che Guevara (Cuba, Venezuela) with the economic views of Milton Friedman and the “Chicago Boys” (Chile) during the past 40 years, and you can see why Chile has become a poster child for free market reforms. As the late, great Jim Rohn observed, “People aren’t building rafts to escape to Cuba.”

Chile: Consistently Hot

While most global stock markets go in and out of fashion, Chile has been the single, most consistent performer among all global markets over the past decade. It has ranked as the third-best performing market in the world for each of the last 10 years, 3 years and year-to-date.

Sadly, U.S investors have not profited directly from the Chilean index’s performance, until the launch of the iShares MSCI Chile Investable Mkt Idx (ECH) in November of 2007.

But had you invested $10,000 in the iShares MSCI Chile Investable Mkt Idx (ECH) on the date of its launch on November 20, 2007, you’d be sitting on $12,001 — a solid 20% gain. Had you invested that same amount into the S&P 500, you’d have only $8,685. That’s a remarkable 38% difference over the span of only 27 months.

Chile also has been a star this year among emerging markets, up 6.9% so far, the top performer in Latin America, even as the overall MSCI Emerging Markets Index has dropped 5.4%.

Bottom line? Chile may sell-off in the next few days after its devastating earthquake. But I believe that Chilean equities will soon find their feet, and will be among the top stock-market performers for the coming decade.

Leave a comment

Predictions of the “Great Roubini”

Predictions of the Great Roubini


Leave a comment

Build Your Fortune BRIC by BRIC

Few financial concepts have caught on as quickly as “BRICs”, which stands forBrazil, Russia, India and China, the “Big Four,” fast-growth economies in the world today. Goldman Sachs economist Jim O’Neill coined the phrase back in 2003, and it now has come into widespread use as a symbol of the shift in global economic power away from the developed G7 economies toward the developing world.

BRICs Building the World

By dint of their sheer size and population — and their collective decision to embrace their own particular brand of capitalism — BRICs are the economic future of the world. Together, the BRICs encompass more than 25% of the world’s land mass and 40% of the world’s population. And thanks to their predicted rapid growth by 2050, the BRICs could eclipse the joint economies of the current richest countries of the world. China and India will become the dominant global suppliers of manufactured goods and services. Brazil and Russia will be the world’s leading suppliers of commodities. The BRICs today already account for a combined GDP of $15.435 trillion dollars on a purchasing power basis. By that measure, they are already collectively larger than the United States.

Here’s what Goldman Sachs had to say in its original report “Dreaming with BRICS: The Path to 2050,” published in 2003.

* China’s economy will surpass Germany in the next few years, Japan by 2015, and the United States by 2041.

* India’s growth rate will be the highest — not China’s — and it will overtake Japan (today the world’s second-largest economy) by 2032.

* BRICs’ currencies could appreciate by 300% over the next 50 years, providing a big tailwind for investors in BRIC assets.

* Taken together, the BRICs could be larger than the United States and the developed economies of Europe within 40 years.

* By 2025, BRICs will bring another 200 million people with incomes above $15,000 into the world’s economy. That’s equal to the combined populations of Germany, France and the United Kingdom.

If anything, Goldman Sachs has become more bullish on the BRICs since it published its original report. The size of China’s economy overtook Germany’s economy in 2008, a year earlier than expected, and will overtake Japan in 2010. Goldman Sachs now believes that the Chinese economy will overtake the United States by 2027. And with India accounting for 10 of the 30 fastest-growing urban areas in the world and 700 million people moving to cities by 2050, its influence on the world economy will be bigger and quicker than implied in 2003.

BRICs on a Roll

The BRIC countries have stepped onto the world economic stage with a newfound confidence. Shanghai hosting the World’s Expo in 2010 highlights its aspiration to become a global financial center by 2020 — investing twice what rival Beijing did when hosting the 2008 Olympics. Brazil is about to embark on its own infrastructure boom as it is hosting both the World Cup in 2014 and the Olympics in 2016. Two of the world’s top five on the Forbes Rich list are from India. (Number one is from Mexico.) In 2010, Moscow has the second-highest number of billionaires in the world after New York City.

Here’s why you can expect the BRICs’ roll to continue.

First, for the first time in recent memory, BRICs are growing not by borrowing, but by investing. China has the world’s highest savings rate. Brazil and Russia are sitting on huge foreign currency reserves, thanks to windfalls from oil profits. Even freewheeling Brazil is showing heretofore unseen discipline by running a fiscal surplus.

Second, soaring commodity prices have put more money in BRICs’ pockets than ever before. That means much less danger of a financial meltdown like the ones Brazil and Russia had in the 1980s and 1990s.

Finally, higher credit ratings mean that BRICs today can issue debts in their own currencies. A decade after defaulting, Russia has a higher credit rating than the European Union economies of Greece and Portugal. The result? Much more stable economic expansion and financing of investment that both depend on the whims of foreign investors.

BRICs Solid?

“Prediction Is Hard, Especially about the Future.” —Yogi Berra

Here’s a reality check: Despite their recent high profile, BRICs have to get a lot of things right to imitate the success of Japan, Germany and South Korea. Potential problems include China’s oppressive regime, India’s choking bureaucracy, Brazil’s history of policy flip-flops and Russia’s gangster capitalism.

So yes, the BRIC economies are collectively already about 15% bigger than the United States. But take away the economic affirmative action of purchasing power parity, and look at wealth in real terms, and the U.S. GDP ($14 trillion) is almost 40% larger than all four BRICs combined ($8.6 trillion). Using real GDP, the average American is almost 15 times richer than his or her BRIC counterpart. After all, there are 2.6 billion total citizens in the BRICs and only 308 million Americans. And in spite of the nation’s billionaires, more than 200 million Indians live on less than $2 a day.

And historical prediction is a mug’s game. The year 1900 had its own version of BRICs: Argentina, Russia, Austria-Hungary and the United States were the fastest-growing economies in the world. Investors were clamoring to buy Russian railroad bonds for the same reasons that they are investing in Chinese solar stocks today. What did the world look like in 1950? Two world wars and several revolutions later, Austria-Hungary and Russia didn’t even exist; Argentina went from economic bull to basket case, and the United States was a global superpower, responsible for 50% of the world’s economic output.

BRICs: Building Your Way to Profits

Cautionary tales notwithstanding, BRIC countries today offer some of the most exciting investment opportunities on the planet. You can make more money in one month investing in BRIC stocks than what you can grind out in the S&P over three years. Brazil’s stock market, the Bovespa, has gone from about 9,000 in September 2002 to over 70,000 in May 2008. Savvy investors in Russia made more than 60 times their money between the meltdown in September 1998 and the market’s peak in May 2007.

And today, it’s easier than ever to invest in BRICs. Among companies listed on the New York Stock Exchange, 34 are Brazilian, six are Russian, eight are Indian and 16 are Chinese. And that doesn’t include technology companies that are listed on the Nasdaq. There are a handful of BRIC exchange-traded funds (ETFs) as well.

The lesson? Investing in BRICs can offer you one of the most fascinating (and profitable) ways to invest over the coming decades.




Leave a comment