How -- and Why -- to Invest in Brazil

Look beyond the multinational giants and follow the Brazilians to where they spend their rapidly increasing paychecks.

I always carry some Brazilian currency in my wallet as a memento of my annual trips to see family in São Paulo. I especially relish dining in São Paulo, one of the world’s great cities for eating and drinking. Oh, how I love feijoada, a tasty stew of meat, rice and beans that most Brazilians eat twice a week, and hot pães de queijo and other salgados, or savory snacks. And there’s no better mixed drink than a caipirinha, especially if it’s made with small-batch artisan cachaça and frutas vermelhas. Shopping in São Paulo is superb, too, though the bargains aren’t as great as they were a few years ago.

The same can be said of Brazil’s stocks, many of which have doubled and tripled since the world’s markets pulled themselves out of the quicksand two years ago. Brazilian shares sit midway between cheap and expensive today, based on indicators such as price-earnings ratio and price to book value (assets minus liabilities). But some analysts, citing the flood of opportunistic money that’s been pouring into virtually all emerging nations, say developing-markets stocks are set to stumble. If so, Brazilian shares could suffer a nasty correction.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.