Brazil is throwing a big impeachment party

hank

http://www.bloomberg.com/news/articles/2016-04-15/impeachment-sunday-brazil-cooks-up-rowdy-made-for-tv-spectacle

Sold my position in PRLAX after just under 3 months. The fund gained more than 35% over that time. Swallowed a 2% early redemption fee rather than risking Sunday's impeachment vote. After the penalty the actual gain worked out to just shy of 33%. Being in a Roth, there shouldn't be any tax consequences.

Over half this fund is invested in Brazil. Roughly another 20% is in Mexico. I've followed the turmoil in Brazil closely since purchasing the fund. Some take-aways:

-Brazil's President's popularity among the public is currently measured in single-digits.
-Brazil's been mired in deep recession (or depression) for many years.
-The Brazilian government top to bottom (and including many in the legislature) appears riddled with corruption.
-An impeachment vote (referenced in the article) will be held on this Sunday.
-The impeachment issue is deeply intertwined with Brazil's markets and economic fortunes, with investors hoping a new government would take measures to heal the economy.

TSP_Transfer

Hey @hank
Where's all that Hot Money/Alpha Going now? Good call.Buy the rumor sell the news ?
Good Background Here:
Brazil's unfolding political tribulations are a significant departure from its recent trajectory. Just a couple of years ago, Brazil seemed destined for greatness. The biggest economy in South America, Brazil is part of the so-called BRICS (Brazil, Russia, India, China and South Africa), a group of emerging economies highlighted for their massive growth potential. Social progress accompanied its economic advances. The World Bank praised the country for reducing inequality and raising the standard of living for its poorest citizens from 2003 to 2014. So how did Brazil fall so far? To ensure that the Petrobras scandal becomes a milestone in the country's progress, rather than the event that derailed its rise, Brazil must examine its underlying causes.

https://www.stratfor.com/analysis/chance-change-brazils-scandal

hank

TSP_Transfer said:

Hey @hank
Where's all that Hot Money/Alpha Going now?

Hi TSP,

PRLAX was a small speculative position opened January 18 which I thought might net a 30-50% gain over perhaps 2 years based on how beaten-up the fund was (something like -30% a year going back several years) and the cyclical nature of Latin American markets. Also, energy prices had reached rock-bottom. I had decided to sell if/when the gain approached 40%.

But circumstances intervened. While Sunday's impeachment vote may succeed and the market rally Monday, I didn't think it was worth risking the gains already achieved. This fund can easily fall 4% in a single day. Russia and Saudia Arabia are meeting over the weekend to try and reduce oil production. Latin American markets react strongly to oil prices. So a second uncertainty had been introduced.

Currently the money (only about 4% of assets) is resting comfortably in PRWCX.