Safehaven | EWZ: First Significant Casualty In The Global Financial Meltdown

May 24, 2006

EWZ: First Significant Casualty In The Global Financial Meltdown
by Jan Allen

iShares MSCI Brazil Index, symbol EWZ, has lost 23% of its value in just two weeks falling from $46.85 on 05-09-2006 to $36.33 on 05-23-2006.

EWZ is an investment that seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the Brazilian market, as measured by the MSCI Brazil index.

The P/E ratio on this ETF is 10; the P/E ratio on SPDRs, SPY, is 15. Having a P/E ratio significantly less that that of the S&P, the question comes up, why has this investment suffered such a significant loss in such a short period of time?

The quick loss of 23% of EWZ's value is attributed to

1) Political turmoil in Brazil.

2) Bolivia's nationalization of Natural Gas fields that were once owned and managed by Brazilian companies.

3) The dramatic growth of this investment -- it has risen 100% in just two years; stocks that go up fast, come down fast.

How much more of its value it will loose and how quickly is unknowable.

EWZ's 23% loss of value is just the first significant casualty in a global financial meltdown in today's economic "Age of Hyperinflation" which will see inflation roar as the value of real estate, stocks, bonds and the dollar become worthless http://tinyurl.com/o3hqk and which is accompanied by today's political age, the "Age of Tyranny". http://tinyurl.com/lboom

For financial security, one's best financial investment is gold placed in the vault. http://tinyurl.com/nj8lf

Jan Allen
Prospering Bear

Jan Allen is an analyst and journalist with Prospering Bear, a website providing thoughtful information on how to prosper in the coming Bear financial market
http://my.opera.com/prosperingbear/blog/.