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Making the Case for Investing in Mexico EWW 1.1

First of all, I like charts. I like back-tests too. So, let’s take a look at how the Mexican ETF, EWW, has performed against the S&P 500 ETF, SPY, over the past 20 years.

 

I think most people who put some thought into their investments can look at this information from several different angles. I look at this from a long-term accumulation investment perspective, because I have a minimum 15 year investment horizon. Although, I am not a short-term or swing trader, I believe there could be a case made for that type of investment too. Here are a few things that stick out to me when viewing this chart:

Certainly, one can easily make the case as to why not to invest in the most popular Mexican equity ETF (EWW). There are many dark clouds to acknowledge when considering an investment in this area of the world. Here are just a few:

So, where is the good news. Why invest your hard-earned dollars in someplace with such a bleak outlook? Well, each one of the reasons for not to invest in Mexico, stated above, can easily be restated as reason to invest in Mexico.

As I stated at in the beginning, I like charts, and I like back-testing potential areas for investment. So, here’s a chart comparing Mexico, SPY, and Emerging Markets (EEM):

Although this is a shorter time-frame than just comparing Mexico with SPY, you can still see the low correlation to SPY and potentially a higher investment expectancy. While I do invest in broad Emerging Market funds, I don’t think they are discounted deeply enough yet to warrant an investment at this time. Also, I prefer DEM over EEM.

Conclusion: The long-term investor would be wise to consider putting some of their foreign, international, or emerging markets funds to work in Mexico now or in the near future. The value investor should consider the expectancy investment opportunity that lies within the Mexico ETF (EWW).

Deep Value ETF Accumulator quote: “If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”   –  It is true that perfumes come and go out of popularity, but no trend lasts forever. There are trends that last 3 months; there are trends that last 3 years. Benjamin Graham

Disclaimer: I am long the iShares MSCI Mexico Capped ETF EWW. I am not an investment adviser. I am a retired U.S. Air Force crew chief and a metrology technician somewhere deep inside the Arctic Circle. Do your own due diligence please. I am also not a “pumper”. I’m not trying to pump this ETF. I am just sharing my observations. I will be long EWW whether or not others concur with me.

Thanks for reading, Micah McDonald, aka, The Deep Value ETF Accumulator

 

 

 

 

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