All windows point to the USA – 09/04/2023 – Marcos de Vasconcellos

There is a saying repeated in the US financial market, which begins to pop up at this time of year: “Sell in may and go away” — something like “in May, sell and go away”.

The phrase is based on the historical analysis of the stock market there. Since 1945, in the May-October half, the S&P 500 has risen by an average of 2%; from November to April, the high is usually 6.7%.

Is it a certainty? No, sure. Without uncertainty and disparities there would be no market. But it’s “popular wisdom” — with lots of quotation marks, please — that can give clues to flesh-and-blood investors, people like us.

If you already invest, by the way, you know that it is normal to find the warning that past profitability does not represent a guarantee of future profitability. That is: it is not because it was like that that it will be like that. In 2020 and 2021, for example, the US stock market bullishness between May and October was consistent.

Economic cycles, however, are not so named for nothing. We shouldn’t find markets too bullish in the next six months.

Looking at the path of money historically gives a good perspective. “Follow the money”, as detectives in novels say. And a simple exercise to find clues and understand the paths of your investments is to compare indices.

Our Stock Exchange, the B3, has a lot of them, far beyond the Ibovespa. There is the real estate sector (IMOB); basic materials (IMAT); of companies linked to consumption (ICON); and many others.

And an index draws attention for now doing better than the Ibovespa in virtually all time windows traditionally analyzed, the BDRX. It is made up of 133 securities (BDRs) issued in Brazil, representing stocks on exchanges in other countries, mostly the USA.

The primacy of the BDRX over the Ibovespa, at this moment, is visible in the five-day, one-, three- and six-month windows, as well as the one- and five-year windows. In other words: In the short, medium and long terms, the BDRs are victorious. See below.

Well, our stock market is going through a bad time, full of uncertainties, but the US economy is not at its peak either. The moment well reflects the maxim of the megainvestor Warren Buffett: “Never bet against America”.

This does not mean abandoning your bets on Brazil. It’s just a finding that the market there has performed better than here in different time windows and that, now, as we prepare for yet another frozen period, it remains an option for diversification.

Buying BDRs on our Exchange or investing part of your portfolio directly abroad does not “take money out of Brazil” in any meaningful way. People like you and me don’t create market movements, but they do need to try to identify them, to shield our money from different weather conditions.

[email protected]

PRESENT LINK: Did you like this text? Subscriber can release five free hits of any link per day. Just click the blue F below.