Monday, October 6, 2008 0 comments ++[ CLICK TO COMMENT ]++

How is BRIC doing? Not too well.

One of the theories that was popular over the last few years is the decoupling hypothesis that many took to mean that key developing countries have detached from the developed markets. Some believe that the stock markets are decoupled while others believe the economies are decoupled. Well, I never believed it from day one because it goes against the notion of globalization. If anything, countries are far more coupled now than ever.

Anyone that invested in the famous BRIC countries--Brazil, Russia, India, and China--would have suffered huge losses of late.

BRIC has underperformed the US markets, with Russia and China posting massive losses. Brazil has kept pace with the US markets but if commodities correct hard--drops even more than now--it will drop further.

Having said all that, BRIC investments are not as bad as they seem. There are two points that should be made. One, those that invested in these markets a few years ago still have huge gains. The other is that, it is quite possible that these markets may outperform in the long run. However one thing is certain: the so-called decoupling theory is wrong and I wouldn't invest based on that.

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