A Seeking Alpha Contribution
- Brazil has endured a litany of bad news for investors in the past months, topped off by the recent re-election of Dilma Rousseff as president. The markets have overreacted.
- The Bovespa, the Brazilian stock market, has fallen more than 15 percent since the beginning of September, and now offers value with a 6.9 P/E ratio.
- The market has taken the recent bad news and risks into account, and is poised to move upwards as soon as there is a catalyst.
- The top ETFs to invest in now are EWZ, BRF and DBBR. DBBR is the best option, as it hedges the currency risk.
A contrarian investor attempts to make a profit by going against the conventional wisdom, especially when they believe that the crowd is mispricing securities due to extreme pessimism. The Bovespa, the Brazilian stock market, has fallen precipitously from its recent high of 61,896 on September 2 to sit at 51,772 at the close on November 14. That’s a 15.3 percent drop. It’s true that most of the Brazil-related economic and market news has been bad lately, and there hasn’t yet been a catalyst to draw investors back into the exchange. However, given that all of these negatives are currently accounted for by the market – and that the market likely overreacted to the re-election of Dilma Rousseff as president – Brazil is a buying opportunity for contrarian investors… To Continue Reading, Please Click Here.
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