2011 was an awful year for Latin American stocks, particularly those in Brazil. However, I fully expect Latin American stocks to rebound strongly in 2012. I predict that the S&P Latin America 40 Index will rise 30+% this year and that LBJ will rise 100% into the mid $140s.
How does everyone else think LBJ will perform in 2012?
No, I am basing this on the history of Latin American stocks. In the 24 years between 1988 and 2011, the MSCI Latin American Index (a good proxy for the Dow Jones Latin America 40 Index) dropped in value during only 8 years. The performance in 2011 was the 4th worst during that time period.
Latin American companies performed well, but the stock markets did not because of an aversion to risk. Consequently, stock valuations in Latin America and particularly in Brazil are low.
The MSCI Latin American Index gained 31% or more during 12 of the calendar years in the 24-year period between 1988 and 2011. I fully expect Latin American stocks to rebound sharply in 2012. A projected gain of 100% in LBJ is not unreasonable.