Brazil: Just Another BRIC in the Wall
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  • thibaud

    “Ruchir Sharma of Morgan Stanley argues that the country rose with commodity prices and will fall again when they do”

    Talk about the blindingly obvious!

    I recall a shrewd investor presentation on behalf of Russian companies in 1999 which was cleverly labeled “Russia.com”, with an asterisk and a large footnote:

    * .com = commodities

    As with commodities, investors and analysts tend to be excessively bearish about these countries when recent prices have been low (as in the late 1990s) and excessively bullish when the cycle has already turned.

    But the overall, long-term trend for these nations will almost certainly be strongly upward, because they, like the US, have

    1) abundant natural resources that the world desperately needs and

    2) very large populations that include millions of exceptionally talented, well-educated, shrewd and resourceful people.

    Re. #1, Brazil has massive oil reserves and even more important supplies of that other, more important liquid, FRESH WATER. So does Russia. It’s water that’s effectively exported when you export sugar, wheat or any other ag commodity, and coal also requires vast amounts of water to wash and produce.

    Re. #2, the human capital, aside from India, the other nations’ wealth has been overlooked by investors. In part this is because corruption in these nations has driven out some of their the most talented people – you can’t make a fortune off your brainpower if you can’t protect your IP in a court of law – but it’s nonetheless the case that Russia especially and the others as well have huge, untapped reserves of technical and entrepreneurial talent.

    If rule of law improves in these nations, then look out above. Their entrepreneurs and scientists will start addressing and solving some of the really important problems – in energy, transportation etc – that so many of our time-waster- and online game-obsessed Silicon Valley VCs tend to ignore.

    As Talleyrand said about Russia, the BRICs are “never so strong or so weak as they appear.” Investors now are likely to overlook their hidden strengths.

  • Steven E

    the most recent news suggests that it may take Brazil a little longer to reach its full potential than some of its friends have hoped.

    As the old cliche goes: “Brazil is the country of the future—and always will be.”

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