Monday, March 17, 2014

Another BRIC in the Wall

Remember back when anyone who wanted to juice their returns "just had to" be involved with the BRIC countries of Brazil, Russia, India, and China?  Like many fads that come and go, the BRICs have had their fifteen minutes of fame.  This year alone, Brazil's Bovespa is down 13%, Russia is down 18%, India has bucked the trend with a gain of 3%, but China is down 5%.  
A look at the performance of the BRIC countries over the last few years shows how just when everybody was talking about the BRICs, their best days were behind them.  The chart below shows the performance of each BRIC country's benchmark stock index (in local currency terms) since the end of 2009.  After Russia just dipped into the red this week, the only BRIC country that has seen a positive return over the last 4+ years is India (+24.9%).
So how have the BRICs performed compared to the S&P 500?  Hypothetically speaking, let's just say you succumbed to the peer pressure back at the end of 2009 and allocated $10,000 to the BRIC trade and allocated an equal amount to each of the four BRIC countires.  From the end of 2009 through today, your $10,000 would now be worth about $8,550 (before taking into account currency changes or dividends), for a loss of 14.5%.  Had you taken that $10,000 and invested it in the S&P 500 instead, you would now have about $16,800 (before taking dividends into account), for a gain of 68%.  That's right, the $10,000 invested in the S&P 500 at the end of 2009 would be worth nearly twice what $10,000 invested in the BRICs would now be worth.  Just a reminder that following the herd isn't always the best way to invest.

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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.