Yesterday, we saw articles and interviews alternately asserting that China was the leader, that Brazil was the leader, and that the US was the leader. None of those headlines gave enough information for a discriminating audience to put the data and the assertions into an overall context.

Your job as an investor includes being aware of your time frame, the time frame in the news references you read or hear, and to carefully parse the information to avoid being confused or misinformed.

Let’s look at this issue with respect to the relative price performance (not total return, which includes dividends) of the US and the BRIC markets using StockCharts.com index data:

• US – S&P 500 (index symbol $SPX)
• Brazil – Bovespa (index symbol $BVSP)
• Russia – Russian Trading System (index symbol $RTSI)
• India – Bombay Stock Exchange (index symbol $BSE)
• China – FTSE/Xinhua 25 (index symbol $FXT)

The table below ranks each country index from 1 through 5 (1= best) for eleven different cumulative periods of time from 7 years to 5 days.

The conclusion from this table is that Russia was generally the worst and Brazil was generally the best.  The US was the second worst.

The next table ranks each country index from 1 through 5 (1= best) for calendar year price returns for 7 years from 2002 through 2008.

The conclusion from this table is that Russia was the worst, the US the second worst, and Brazil was the best.

Looking back at both tables, the rankings alone don’t give a strong indication about whether China or India was a better performer.

You can draw your own conclusions from the charts below which plot the price return of the five country indices for each of the periods and years shown in the tables above.

The tables and the charts illustrate that time frame is key to saying which security is a better performer than the other.

Put soundbites and short business news snippets in larger context to maintain perspective.

Reasonable investable proxies for the five countries are US (SPY), Brazil (EWZ), Russia (RSX), India (IFN, avoid the exchange traded note, INP), and China (FXI).

Cumulative Period Charts

7 Years

6 Years

5 Years

4 Years

3 Years

2 Years

1 Year

6 Months

3 Months

1 Month

5 Days

Calendar Year Charts

2002

2003

2004

2005

2006

2007

2008

Richard Shaw
QVM Group LLC

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