Time to Begin a Long-Term Stake in Market Vectors Brazil Small Cap

With the weakness in Brazil the past week, we are going to take this opportunity to begin a long-term stake in Market Vectors Brazil Small-Cap (BRF). We highlighted this name in the summer under $29 [Jun 2, 2009: Market Vectors Brazil Small Cap (BRF) - a New ETF for Exposure to Brazil] It was a new ETF, so we were not ready to jump in, but it has had a great run, and has enough volume on a daily basis to show others are interested in it as well. Obviously if the dollar corrects in the weeks to come, foreign exchanges will take a hit blah blah blah.

But this just might be our favorite market on the planet right now, and with the stopping out of most of our only-Brazilian position Wednesday, it's a good place to begin a stake. We'll start modestly with a 1% stake, and if there is weakness in the coming months look to add - eventually I'd like to make this a large weighting in the fund. I'd like to be a buyer in scale somewhere int he lower $30s if afforded the opportunity in the months to come. I am not using any sort of technical analysis or "trading" it, we're wanting to build a core position here for the very long run.

For now, we'll get started in BRF with a buy at the open...

Long Market Vectors Brazil Small-Cap Fund in fund; no personal position

Comments

[mbkelly75:]

I have been thinking the same thing for the same reasons. Thank you for verifying my thought process.

Oct 30 08:26 AM

[enigmaman:]

Based on a economic world view it does appear that the long term sustainable growth needed to rebuild ones wealth will come from the BRIC and some of the newly discussed emerging markets. However this is no secret as witnessed by the dramatic run up of their securities, any market correction should result in these all getting a nice hair cut, so I will just bide my time and if Im wrong about a correction I will buy at higher prices but in a confirmed bull market.

Oct 30 09:06 AM

[Trinvester:]

this article just added a few more dollars of premium to the stock price!

Oct 30 10:11 AM

[jambo:]

As an owner of BRF and EWZ, I agree despite the thrashing they are both taking as we write this.
BUT, and I direct this to the author or anyone else willing, can you explain to me why my investment in funds totally dedicated to that market and economy are no more than straw in the winds of the NYSE? Are these ETFs not built of actual equities in that market?? Must I buy similar funds/ equities from the Brazilian market and in the real to avoid this phenomenon? Because I am on the verge of attempting exactly that in search of stability.
At times it seems as though there are a number of hidden factors stacked against me, that I am not getting a level playing field in these funds. I mean, if the dollar suffers would those equities not be worth more of them? And this 2% trade tax both in AND out is some real bs, word association intended.
Finally ENIGMAMAN; "Based on a economic world view it does appear that the long term sustainable growth needed to rebuild ones wealth will come from the BRIC and some of the newly discussed emerging markets..."
I dont challenge that presumption but do you have a moment to give us a couple of details in support?

Oct 30 01:49 PM

[User 487063:]

Just remember that a good part of the money invested in those funds is what you'd call hot money. For the Brazilian economy to show some sustainable growth on the medium to long term there needs to be a very strong U.S. market for Brazilian exports. You can't have one without the other.

Oct 30 03:08 PM

[TraderMark:]

I would love for you to be right, I would like to build a large position much lower. Again just a starter stake here so it stays on my radar

Indonesia is the other I want.


On Oct 30 09:06 AM enigmaman wrote:

> Based on a economic world view it does appear that the long term
> sustainable growth needed to rebuild ones wealth will come from the
> BRIC and some of the newly discussed emerging markets. However this
> is no secret as witnessed by the dramatic run up of their securities,
> any market correction should result in these all getting a nice hair
> cut, so I will just bide my time and if Im wrong about a correction
> I will buy at higher prices but in a confirmed bull market.

Oct 30 04:36 PM

[TraderMark:]

right now the entire world is 1 big trade

US dollar down = everything up
US dollar up = everything down

the correlations are pathetic

so when NYSE is down Brazil will go down

the difference is degree, your foreign markets are giong to be much more volatile. You will make more when they run and (generally) lose more when they fall.

To wit, I think the Dow is like up 11% for the year (could be wrong, somewhere within a few % of that) and Brazil before today was somewhere in the 60% range

Last year Dow was down 30%+
Brazil I think 50-60%.

So you get the picture...these are high beta plays, but over a 10 year horizon I want to go with demographics, growth and believe it or not much more responsible government. Which would be laughable if you know the Brazilian story over the last 30 years. :)

But whatever the case right now everything has become 1 huge computer trade against the dollar. So if the dollar keeps running expect Brazil to take a big hit. Which for longer term views will be a great thing.

On Oct 30 01:49 PM jambo wrote:

> As an owner of BRF and EWZ, I agree despite the thrashing they are
> both taking as we write this.
> BUT, and I direct this to the author or anyone else willing, can
> you explain to me why my investment in funds totally dedicated to
> that market and economy are no more than straw in the winds of the
> NYSE? Are these ETFs not built of actual equities in that market??
> Must I buy similar funds/ equities from the Brazilian market and
> in the real to avoid this phenomenon? Because I am on the verge
> of attempting exactly that in search of stability.
> At times it seems as though there are a number of hidden factors
> stacked against me, that I am not getting a level playing field in
> these funds. I mean, if the dollar suffers would those equities
> not be worth more of them? And this 2% trade tax both in AND out
> is some real bs, word association intended.
> Finally ENIGMAMAN; "Based on a economic world view it does appear
> that the long term sustainable growth needed to rebuild ones wealth
> will come from the BRIC and some of the newly discussed emerging
> markets..."
> I dont challenge that presumption but do you have a moment to give
> us a couple of details in support?

Oct 30 04:39 PM

[Wisdom vs. ...:]

excellent post and follow up Mark, thanks. i agree that BRIC will outrun the US, at least until we get a new small business friendly administration; in the meantime, we will mirror big government, big business-friendly Japan and Europe

Oct 30 06:28 PM

[jambo:]

On Oct 30 03:08 PM User 487063 wrote:

> Just remember that a good part of the money invested in those funds
> is what you'd call hot money. For the Brazilian economy to show some
> sustainable growth on the medium to long term there needs to be a
> very strong U.S. market for Brazilian exports. You can't have one
> without the other.

Sorry but I disagree with that view. It would means that Brazilian development of it own infrastructure and internal economy would make no difference to those stock sectors -equities- contained in the etfs. Their oil and natural resources would mean nothing?? The gowth of their own consumer economy- nothing? There will emerge numerous other buyers for their goods, they arent tied to US alone and will prove it soon enough, imo.

Nov 02 11:24 AM

[jambo:]

Add to the above the burgeoning numbers of citizens who now qualify as Brazil's middle class (read CONSUMERS) and it negates the "US exports as the necessary aspect of Brazilian prosperity" theory.

Nov 03 05:39 PM

[mbkelly75:]

The added volatility simply makes it easier to make money with it. You can use the Moving Averages to let you know WHEN to get in and out. Getting in when they are down and out when the MA says that they will be going back down and it is time to get out, can make you some great money on the trading. In the meantime, the dividends pay you to wait while you are in. I bought EWZ when it was paying a 5% dividend BECAUSE it was down and it has worked well for me. That the Real is a MUCH stronger currency than the US Dollar has been an additional benefit for me. Good job on the article - keep up the good work.


On Oct 30 04:39 PM TraderMark wrote:

> right now the entire world is 1 big trade
>
> US dollar down = everything up
> US dollar up = everything down
>
> the correlations are pathetic
>
> so when NYSE is down Brazil will go down
>
> the difference is degree, your foreign markets are giong to be much
> more volatile. You will make more when they run and (generally)
> lose more when they fall.
>
> To wit, I think the Dow is like up 11% for the year (could be wrong,
> somewhere within a few % of that) and Brazil before today was somewhere
> in the 60% range
>
> Last year Dow was down 30%+
> Brazil I think 50-60%.
>
> So you get the picture...these are high beta plays, but over a 10
> year horizon I want to go with demographics, growth and believe it
> or not much more responsible government. Which would be laughable
> if you know the Brazilian story over the last 30 years. :)
>
> But whatever the case right now everything has become 1 huge computer
> trade against the dollar. So if the dollar keeps running expect
> Brazil to take a big hit. Which for longer term views will be a
> great thing.
>
> On Oct 30 01:49 PM jambo wrote:

Nov 04 11:46 AM