The iShares Latin America 40 ETF beat the S&P 500 this year. Fifteen percent versus eleven percent. Caruso-Cabrera calls these "the best tailwinds in decades." Decades is doing a lot of work in that sentence.
Retail traders heard the word tailwinds and immediately bought calls without checking which countries are actually in the ETF. Brazil takes up half the fund. Mexico is another quarter. The rest is Chile and Peru with a sprinkle of Argentina for anyone who enjoys financial self-harm. But sure, tailwinds.
Four percentage points of outperformance triggered a headline about generational opportunity. The S&P could sneeze tomorrow and erase that gap. Then what? Do we write about headwinds? Crosswinds? A light breeze from the northeast?
The technical setup says none of this matters. ILF has been carving out a distribution pattern since March. Volume dried up two weeks ago. The fifty-day moving average is flatlining like a patient who refused to read the consent form. But some guy in a suit said tailwinds on television so now your cousin Brad is all-in on Brazilian mining stocks he cannot pronounce.
Brad does not know what commodities Brazil exports. Brad does not know who runs Mexico's central bank. Brad barely knows that Latin America is not a single country. But Brad watched a three-minute segment about emerging markets and decided this was his moment. Brad now owns six hundred shares of something called EWZ because the ticker sounded cool.
The same people who panic-sold regional banks in April are now chasing a four-point spread in a basket of economies they have never studied. They will hold through the next currency crisis and then blame Jerome Powell when the peso implodes. That is the tailwind. Stupid money flying south for the winter and never coming back.
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