Go South Young Man !

Photo: Petrohue Falls and Mt. Osorno, Chile 

In this bear market, it is not easy to make money.One has to look outside of the box for opportunities. This means going to emerging markets. Many centuries ago, young men in Europe would go to East because thats where the riches were there.

Nowadays its not necessarily the East that shines. While countries like China and India are growing they face many “hiccups” and other countries like Japan are in a funk for many years. So these days one has to go down south – meaning south of US like Mexico, Brazil, Chile, etc. to make some decent profits.

There are hundreds of stocks from South and Latin America that trade as ADRs in the US.The trick is to identify profitable and growing companies. The following are four stocks that have grown over 25% YTD (Year-To-Date).

1.Company: Sociedad De Chile – SQM
Country: Chile
YTD Growth: 105.88%

2.Company: Telenorte Celular – TCN
Country: Brazil
YTD Growth: 41.10%

3.Company: Fomento Economico Mexicano – FMX
Country: Mexico
YTD Growth: 29.39%

4.Company: Gerdau – GGB
Country: Brazil
YTD Growth: 40.66%

Majority of the emerging markets are commodity based economies. So caution is needed when jumping into any of the stocks like above.

When commodities fall, emerging markets can fall harder.In article titled ”
The End Of The Road?” Roger over at Random Roger blog writes that “iShares Brazil (EWZ) is down 25% from its high a couple of months ago.”

Similarly in 2007,2006 and 2004 EWZ fell over 20% in about a month.So careful analysis of individual stocks and a strong stomach is required for investing in these markets.

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