Banker bullish on Brazilian stocks

Alexander MacKnight

Occupation

Banker

The portfolio

Real estate properties, minority interest in a private company, stocks, bonds and cash

The investor

Alexander MacKnight has 10 years of experience as a banker, with specializations in structured finance and emerging markets. But he was laid off last month.

A severance package is providing some extended breathing room while he job hunts and explores full-time investing and blogging (cashchronicles.com). He'll keep going until he lands a new job or his investments and writing pay "a bit more, whichever comes first."

How he invests

Mr. MacKnight owns "a few homes," which he rents out. He also has a minority interest in a health-care company that a friend started. In his retirement account, he holds a target-date fund that shifts out of equities in stages and into bonds as his retirement date approaches.

In his taxable account, he holds stocks and bonds, mostly in the form of exchange-traded funds (ETFs). "I tend to be a value investor," Mr. MacKnight says. "I have a long-term horizon and use dollar-cost averaging over long periods to achieve a target return." Freed from an office routine, he is leveraging his knowledge of emerging markets to research investing opportunities. Currently, he is bullish on the iShares MSCI Brazil Capped ETF. Brazil is enmeshed in a continuing political and economic crisis.

At various times, the turmoil has included bribery scandals, capital flight, high inflation, double-digit interest rates, recessionary conditions and unemployment over 10 per cent.

What a great time to invest! "If you look back in time, crises are … usually great times to pick up stocks," Mr. MacKnight declares. The financial crisis of 2008 in the United States is an example.

There has been a good rebound in the Brazilian stock market already. But a lot more should be coming: It remains among the cheapest in the world, with a cyclically adjusted price-earnings ratio of just 10.5 – the fourth lowest of all countries.

Best move

Saving money. "It's boring and denies things you may want but in my experience, it is the single biggest factor as to why most people become rich," Mr. MacKnight says.

Worst move

It was "not buying the stocks of Apple, Amazon or Facebook" and missing out on their growth. The consolation is that he does have some exposure to these companies though his ETFs.

Advice

"Save, save, save," he urges. "And if you know nothing of investing, just put the money consistently in an index fund [ETF] … you will probably beat most of the people buying individual stocks in the long run."

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com