Comments on the Brazil Bloodbath

May 22, 2017

Brazil stocks, government bonds and currency suffer large one day losses last week on bribery allegations against their pro-business president. Markets, not liking this too much, quickly sell and the Brazil stock market finds itself limit-down; the currency (Real) down 6% and bonds down ~4%.

A few things to think about...

1) If you invest most of your money into one country, you put yourself at risk of a Brazil-like event wiping out a good chunk of your cash.

2) In the event of an event like this, and you see your accounts down 10-20% in an instant, do you know what to do? Do you have a plan for handling this? Or do you just let it ride and expect to be bailed out by a rebound?

3) Reading headlines, without a rules-based plan in place, can scare you out of your investment - possibly near the bottom of the move. In the U.S., this occurs most recently in late 2008-09.

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