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Sunday, August 29, 2010

BRIC

BRIC is an increasing popular acronym which refers to the nations of Brazil, Russia, India and China. These are the leading "emerging markets" that many feel are economies representing great investment potential. The combined population of the 4 countries is approximately 2.8 billion, or about 40% of the people on the planet. As a comparative example, China's GDP which has grown about 10% a year for the last 20 years, is now about 1/5 the size of the United States, and while currently ranking 5th, will soon be the second largest. And that's just China. Brazil, Russia and India were ranked in 2007 as 10, 11, and 12. With GDP growth last year between 5 and 9 percent, it's no surprise these countries are popular with investors. Will the BRIC's dominate the business world in the near future? Is your money more likely to grow if invested in BRIC Nation industries?


Of course, 2008 has been a particularly difficult year for investors. The S&P 500 index is down over 30% YTD. Three Exchange Traded Funds, (ETF's) that track the BRIC nation markets, Claymore/BNY, (EEB), SPDR S&P BRIC 40 (BIK) and MSCI BRIC Index (BKF) are all down more than 50%. As of this writing it is widely accepted that a world wide economic slowdown is occurring. As is always the case, no one rings a bell and announces that markets have bottomed and you should immediately commit funds. However, at some point when the turnaround begins, it is possible that superior gains can be made in the BRIC nation markets.


Individual investment decisions should be made only with proper due diligence. As has been seen in this market slump, foreign investments may carry with them greater risk. While growth rates in the emerging market nations may vastly outperform the United States economy, the accompanying risk and volatility is probably not for everyone. Assess your own financial status, preferably with the help of a professional before you invest anywhere, particularly in more volatile markets.

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