Optimism over future conditions has not evaporated among business people in some major Latin American nations. According to a report "International Business Report 2012" by Grant Thornton International, business people in Peru, Brazil and Chile harbor high degrees of optimism for the future. The firm's survey of Peru business people found that with a net 78% (those who responded as optimistic minus those who said they were pessimistic) were optimistic about the business outlook.

That tied with the nation of Georgia with the highest scores of net optimism. The net score of 74% for business people in Brazil placed it in third place of the nations surveyed, just behind Georgia and Peru. With a net 52% of business people surveyed classified as optimistic, Chile—with the eighth most enthusiastic business people in the world--made the list of the world's top 10 nations as measured by net optimism of its business populace.

Count me as an optimist!

Just after President Obama (following years of delays) finally signed free-trade agreements with Mexico and Colombia, I added a position in the Global X InterBolsa FTSE Colombia20 ETF (NYSE:GXG) in order to provide LSI subscribers with the opportunity to widely benefit from the additional economic growth that Colombia would achieve from the pact.

In the past, the LSI Model ETF Portfolio, in addition to containing conventional Latin American exchange traded funds, included positions in some funds to provide hedges to protect investments in our other model portfolios. These occasionally included long and short ETFs covering commodities produced by Latin American countries and even currency ETFs to hedge against monetary fluctuations that might have negatively impacted returns to U.S. investors.

The only commodity I'm currently thinking has a chance of providing major excess returns is corn. It's headed for the biggest gain in five weeks as weather conditions in South America endanger corn and bean crops.

For more ETF trading ideas read the attached update and ...

Happy trading!

Rudy

Leading stocks in the week included:
• Empresas ICA S.A.B. de C.V. (NYSE:ICA) +15%
• Compania de Minas Buenaventura S.A. (NYSE:BVN) +14%
• Braskem (NYSE:BAK) +11%
[This represents over a 25% move for Braskem in just two weeks as the world economic picture improves too!!]

For a second consecutive week, uncertainty as to whether Europe can dig itself out of its financial hole combined with increasing confidence that Latin American central bankers can fine tune the area's economies let currency traders to accumulate positions in the region's currencies.

The Brazilian real jumped 3.34% relative to the U.S. dollar during the week ended Jan. 13, resulting in a 4.60% gain for the year to date. The Chilean peso advance 2.15% versus the greenback for a 3.95% year-to-date premium while a 1.96% gain by Colombia's peso left it 5.26% ahead of the buck so far in 2012. The Mexican peso added 0.96% for a year-to-date gain of 2.56%.

However, the region's stock market indices performed in a generally ho-hum fashion. While Brazil's Sao Paulo Bovespa Index moved ahead 0.9% for the week to leave it with a year-to-date surplus of 4.2%, Chile's Santiago IPSA edged only 0.1% higher, leaving it 0.7% above its 2011 close. Less fortunate, Mexico's Bolsa gauge eased 0.7% for the week, leaving it with a 1.4% deficit so far in 2012. Argentina's Merval index surrendered 0.6% during the week, but a big jump in the year's early sessions has it up 11.8% for the year to date.

Read more about these stocks and why they are attractive in the attached update and ...

Happy trading!

Rudy

Read more about the fast-moving Latam stocks mentioned in the attached report:
• PetroBras (NYSE:PBR)
• Net Servicos de Comunicacao SA (NYSE:NETC)

Latin America could be a stock picker's paradise in 2012 - especially for dividend and value investors. It could make a real difference in your retirement or investment plans.

Why do I say that?

For most investors, the year 2011 can best be described as generally a disaster for Latin American stock markets. The region’s major stock market indices collapsed into bear markets in the second half of the year and ended well short of their respective 2010 closing values. The indices ended the year with losses ranging from 3.8% for Mexico to a painful 30.1% for Argentina.

And poor equity market returns may not be the only issue keeping investors on the sidelines as I mentioned last week. So blind, unbridled optimism is not appropriate for the region or equities markets as the year 2012 makes its debut.

But take a longer term view.

Even the disastrous year that just ended wasn’t enough to erase prior gains that have rewarded longer-term investors in Latin America with compound annual percentage gains comfortably in the double digits over the past three years.

For example, our own LSI Growth portfolio surged 95% and the LSI Dividend portfolio doubled to $200,004 since inception in October of 2008. In the same period the S&P 500 gained 38% which means our stock portfolios grew 3 times faster than the U.S. market during the last three years. That's a real, documented difference!

And while the 2011 results were flat, the LSI stock model portfolios again insulated investors from the double-digit percentage setbacks suffered by the major Latin American stock market indices. The Growth portfolio ended the year with a total-return of 3.91%, beating a similarly computed return of 2.09% for the S&P 500. The Dividend portfolio stayed in positive territory for most of 2011 and then pulled back on profit-taking to end with 1.24% lower for the year.

But investing in general ETFs has not been so profitable. Our ETF model portfolio declined by 29%, only slightly better than the negative 30% market return of Argentina’s Merval index. Great trades on sugar (+29%) and Peru (+37%) were offset by poorly-timed trades on oil (-27%) and silver (-14%). The last two were aggravated by the use of the Ultra, leveraged fund versions which work well in a momentum market - but this is no longer a momentum market where you can ride the funds to great results.

I wish I could say just go slow and steady with your picks and avoid leverage to get the greatest returns. But, as I've been saying, don’t expect the new year to any less challenging than the one just (thankfully!!!) ended. So be sure to check regularly for changes in stocks selected and allocations of the model portfolios.

Read more in the attached weekly update and ...

Happy trading this week!

Rudy

Latin American securities markets last week responded to the emerging indications of global growth. It seems reports of the death of the U.S. economic recovery might be premature.

The average U.S.-listed Latin American stock tracked by this service has rebounded 18.8% from its bear market low as of Dec. 16, with half of them posting 15% or more increases in a short period.

My favorite turnaround stock, top rebounder Cemex SAB de CV (NYSE:CX) survived a perfect storm of negativity that included liquidity issues related to corporate debt and worries about a double dip in the U.S. economy. The Mexican-domiciled firm, which dominates the cement business in the Western Hemisphere, outlasted the worries and boomed back to a 121.59% recovery from an early-October trough of $2.27. But despite its initial bounce, I think there could still be a lot of profit potential left in Cemex shares. The price would have to more than double from its most recent close of $5.03 just to match its 2011 high of $10.72. And a return to the $40 level that it approached during more prosperous times in 2007 would mean an eight-fold price advance.

Read more about this stock in the attached weekly update and ...

other stock movers last week included : BVN, HXM, CRESY, KOF, and CCU.

• Compania de Minas Buenaventura S.A. (NYSE:BVN) +4.5%
• Desarrolladora Homex S.A. de C.V. (NYSE:HXM) +3.6%
• Cresud (NasdaqNM:CRESY) +3.3%
• Coca-Cola Femsa SAB de CV (NYSE:KOF) +2.8%
• Compania Cervecerias Unidas S.A. (NYSE:CCU) +2.0%
• Data date: 12/16/11

Enjoy this short pre-Holiday week!

Rudy