Today, I’m going to tell you about an Argentina stock that’s in a distinct uptrend. But first, let’s talk about how to invest smart…
“Simplicity is the ultimate sophistication.” -Leonardo da Vinci
I have always thought that being too smart was a handicap in investing.
After all, don’t the genius types overanalyze everything and tie themselves in knots?
But a research study by Duke University suggests a strong link between brains and billions. The study explains, “The top 1% in wealth highly overlaps with the top 1% in brains.” The study shows that 45% of billionaires are in the top 1% of cognitive ability.
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Despite these findings, it seems to me that while being very smart is crucial in some areas like creating new technologies, it can also get in the way of being focused and using common sense.
For example, there are many wealthy people who made their fortunes using “simple street smarts” in the real estate business.
If I had to pick what characteristics were most important in becoming a very successful investor, I would pick being opportunistic, patient, decisive, and contrarian.
Let’s look at a few examples.
Famous Smart Investors
John Templeton was a Rhodes scholar but it was his contrarian investing streak to scour the world for bargains ignored by everyone that put him in the investment hall of fame. The patience to hold on until markets recognized the value was a key part of this successful, common sense strategy.
Sam Zell also displayed street smarts in building a $4 billion real estate empire. Zell began buying deep value real estate in down markets in the 1960s, and following this strategy over the next 40 years yielded huge gains.
In 1990, when Argentina was going through a rough patch due to a currency crisis, a young Eduardo Elsztain had the guts to walk into the New York City offices of George Soros and talk him into investing $10 million in Argentine real estate.
With a little patience and some luck, Elsztain turned that $10 million into a fabulous $500 million Argentine real estate portfolio. Investors who joined him and Soros early in their Dolphin Fund would have turned $100,000 into $1.9 million in a decade.
A Contrarian Argentina Stock
Mr. Elsztain is the former CEO of Cresud (CRESY), a leading Argentine agricultural and property company.
Cresud’s business model focuses on the acquisition, development and exploitation of properties having attractive prospects for agricultural production and/or value appreciation and the selective disposition of such properties where appreciation has been realized. The company is also involved in farming activity, through crops and cattle production in the region.
Additionally, Cresud owns a 62% stake in IRSA Inversiones y Representaciones S.A. (IRS), Argentina’s largest, most diversified real estate company. Through its subsidiaries, IRSA manages an expanding top portfolio of shopping centers, hotels and office buildings, primarily in Buenos Aires.
History seems to have come full circle for Argentina.
Argentina stocks are no strangers to volatility as investors fret over whether President Mauricio Macri will win re-election in October amid double-digit inflation and a weak currency.
But consider this: In 2018, the MSCI Argentina index dropped 52%. So far in 2019, the iShares MSCI Argentina (AGT) exchange-traded fund (ETF) is up 34%.
Obviously, this sort of investing is for risk capital only and you’ll need a little patience to wait for an uptrend.
While typical investors wouldn’t touch Argentina with a 10-foot pole, I always try asking myself a few simple questions about a stock like Cresud.
Does this Argentina stock represent real value with a product supported by strong demand? Does the company have a strong balance sheet and capable management? Is the upside potential far greater than the downside risk?
And finally: is the stock in an uptrend?
A yes to these basic questions leads me to think that CRESY is a good proxy for those brave enough to look beyond the headline-grabbing troubles in Argentina.
Call it opportunistic or contrarian.
I call it smart investing and keeping things simple.
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