I take your point, but we're dealing with two different "values:" there is the value of the shares as traded on the stock exchange and the value of the fund's holdings. You seem to think that there is a direct and absolute correlation between the two, but that's obviously not the case - witness the fact that I am up around 30% in a few months time, and the only thing that's changed is the continuing improvement in relations between the two countries.
The thesis is simple: the fund's share-price responds directly and proportionately to changes in Cuban-American relations. As those relations improve, the shares become more valuable. If those relations deteriorate, so will the share-price. Armed with that information, I'd suggest that you read the newspaper.
The State Department announced this afternoon that Cuba has been removed from its list of states sponsoring terrorism. It's expected that this will pave the way for the opening of embassies in Havana and Washington - an event that some anticipate may occur as early as next week.
Cuba barely has an economy after more than 50 years of repression from our government and its own. If you want to understand Cuba and what is only now beginning to play out there, consider the transitions to capitalism in China and the former Soviet Union. The only "pure plays" in Cuba, at the moment, are mom-and-pop restaurants, spare-room rentals and smuggled auto-parts. To get in on those, you would have to visit Havana and even then, if all went well, you would probably walk away with a couple of hundred bucks. Again: the Herzfeld Caribbean Basin Fund is, in effect, an index that responds to the ups and downs of Cuban-American relations.
The problem with your "short thesis" is that investors in CUBA are buying shares, not properties. If the shares appreciate - for whatever reason - they will profit from it. Let's see what happens if and when an announcement is made that Cuba is being removed from the State Department's list of countries supporting "terrorism."
What the CUBA skeptics don't seem to understand (or refuse to acknowledge) is that the ETF's share-price reacts directly and dramatically to any and all news with respect to the normalization of relations between the U.S. and Cuba. That is the only relevant factor vis-a-vis the share-price. And inasmuch as both countries are determined to improve relations with one another, we can reasonably expect a series of positive developments such as the removal of Cuba from the State Department's terrorist list, the opening of embassies, and so on. While there will undoubtedly be disagreements and setbacks, the trend is clearly positive.
The value of proven reserves is one thing. The quantity of proven reserves is another. When companies say that proven reserves have increased by a certain percentage, they are referring to the latter - not the former. It is a better measure of a company's performance because it is a variable that is, to some extent, within its control, whereas the price of a commodity is determined by macroeconomic factors.