This year’s hot market for private-equity firms and hedge-fund managers

Oh yeah Bernie could never happen in Brazil. Give it enough time - it's going to happen, because people in Brazil are just as stupid and greedy as everywhere else.

It's a hot market and equity firms and hedge funds are moving in? Time for me to sell then...

Right now, Brazil is a bullish market, inflation is rising vigorously, although the country´s macroeconomic fundamentals are more solid now than ever. Other problems loom, but nothing that can´t be dealt with in the near future.

An (odd) error in this article: the correct name of Rio´s street in Leblon is ATAULFO DE PAIVA, not Paiva de Ataulfo. A lovely neighborhood, by the way.

Parelhas RN

"Just waiting for James AntiBR, Mr Ripley, Math Phys and Stanley Wang ingenious comments."

I was only going to say this article seems badly timed.. Money has been leaving Brazil for the first half of February.. I've been shorting stocks in Brazil since last November and have held that position. Despite overwhelmingly positive sentiment/news last year, there was a failure for the bovespa to generate new highs..

Policy makers still appear to be well behind the curve.. and emerging markets in general appear to bring in price controls, credit controls, capital controls.. makes me nervous when governments fiddle.. But they are slow on interest rate rises.. and tackling inflation..

Globally governments are going to be more tolerent of inflation.. that seems to be the theme for now and indeed it appears to be a way to erode a little bit of the debt!

I hope that you don't find my comment too controversial Parelhas RN

Jolly Roger II : You echo the sentiments of some of my closest friends. I am not sure that I agree entirely.. Brazil will be strong but this phase has been perhaps an opportunity to take a little money off the table and buy back in later on. Brazil we must not forget is a relatively closed economy in some respects..

Raymond1976 I echo that sentiment at the moment.. they will deal with there may be a little bit a tougher landing than first imagined. The rising cost of food redirects some of the income of the poor away from consumer stocks as their incomes are eroded.

I can't wait to see gdp figures for the 1st Quarter.. car sales.. I can't sit still..

I committed a lot of my wealth to Brazil in Feb 09 and I have been handsomely rewarded for this bet. But I do not want to take my money out now, when I made the investment I hoped that the capital would be deployed into developing a great country. 20 years from now I hope that I am both rich and pleased to see a vibrant, wealth-creating middle-class in Brazil tackling her toughest problems - particularly poverty. More investors should take the long-term view.

Zambino from which currency did you transfer the initial investment? I was rewarded for currency appreciation vs developed markets.. indeed. But the growth of the market last year lagged. Did you invest into one of the local funds mentioned in the article? I bought some 'Bank of America' in December so I guess I've leaned back the other way a little. lol. Maybe my timing will be off.. maybe it won't.. but I am planning for larger investments into Latin America (depending on circumstances obviously) in about 3-4 years time. Ben 'money printing' Bernanke is trying to get the rich Americans to spend their deposits.. it seems to be working. We shall see..

Dear "The Economist"

This is an unfortunate article, and you might not know this now, but you will very shortly. As other readers are writing here, IT IS TIME TO SELL, not buy. Or you like to buy high and sell low ? that's what you are recommending... Thank God you are not a private equity or hedge fund focused on Brazil, cause I would really miss some of your articles goinf foreward.

You are late. Very late. Do you know Mr Patrice Etlin, from Advent partners ? he is an excelenet private equity manager down here. Why don't you check his opinion on this matter ?

Raymond1976

So you will be among the ones "giving exit" to the good private equity managers who have entered Brazil 2 years ago, and now want to take profits out and go home. Thanks for that, very kind of you. Why don't you buy some Apple shares. They went up so much recently !!! You will hold a very valued paper. I guess that's what you are after right ? Holding the assests people will admire you for ? intead of buying assets no one knows, but will become aware of when you sell (e.i. buy low sell high).

Good luck, since you are 76, you are young and have time to recover...

The world’s businessmen have the opportunity to meet the wide range of investment projects of medium and long term the country has. They're the preparations for the World Cup in 2014, the great works of the Plan for Accelerated Growth, oil in the subsalt and the extraordinary possibilities that open up with the Olympics in 2016 in Rio de Janeiro.

Mr Ripley

I completely agree with you. What you mentioned perfectly depicts why some investors are still reticent about investing in Brazil.

Parelhas RN - I'm so glad we see eye to eye on something! haha. Kindest Regards.

LMSF - I am speaking on behalf of myself and the people I know obviously.. others opinions may differ.. However I would assert that a lot of infrastructure projects are not attractive to investors. I never get involved in such a complex investment.

One of the best examples investors use is to say, look at Euro Tunnel. Noone wants to put their money in at the beginning. They want to buy it cheap later on for 6 cents in the dollar. It's the nature of that business.

I would be very surprised if the timing is good for people to stump up money to invest in a relatively risky investment against a backdrop of uncertainty. I will probably be proven wrong but I would personally not get involved in an infrastructure project in Brazil.

Most projects in Brazil exceed their budget by multiple times. There are complex reasons for this as we have all at some point highlighted in the comment section of other articles. If the Pan-American games were anything to go by..

Ed (Brazil):

I believe I missed your point. My point is: Brazil has been growing for a while, has the potential to keep the pace in the next years and is politically stable. But it also has some pretty ugly hindrances to tackle. To name a few: regressive taxation effects over private enterprises are very negative; fiscal surpluses are dwindling (and Brazilian exchange rate will not help it for a while); general productivity is falling; and interests levels are resilient to BaCen "macroprudential measures", because of the country´s public bond market profile.

That said, I believe that Brazilian private stocks will be too volatile to my liking, with a few (very profitable) exceptions. I also believe that in 20 years it will have overtaken many developed countries and become an economic powerhouse. But it will surely be a rough road to success.

I agree with most of the posters but I would like to go a bit further. All this investment is important but it should not be the focus of analysis. I would love to know how much of this money actually produces something real in terms of infrastructure and benefits to the people. All this journal is offering and the posters are commenting about is money dealing and that does not necessarily produce results for those who really matter - the people. I think out of every dollar of PFI and “hot money” only about 30 cents reaches the people in form of infrastructure and the rest of it is wasted or diverted in profits for the money dealers, red tape created by the State and regional oligarchies, corruption in general, bad management and incompetence.

In my experience I know that Brazil is a monumental managerial failure and all of that money is not going to make things better, much to the contrary, in some cases it will make things even worse. Let’s do an analogy:

One of the strong points of Chinas model of development is based on its good infrastructure, if a Chinese businessman tells you he will deliver 1000 laptops at your door tomorrow you can believe him, but if a Brazilian businessman tells you he will deliver a ton a sugar at the harbour tomorrow, well...you better seat down and wait for it. Either that or you better have enough flexibility and buy that sugar to be delivered whenever that Brazilian businessman thinks he will be able to deliver.

Also, someone said very nicely that he invested his money in Brazil hoping that in 20 years time Brazil will be a powerhouse. Well, I also wish that but then what we must focus on is how much of all this money will be invested in Health Care, real education and not the ideological claptrap some “teachers” peddle in class to gullible teenagers and crucially, R&D. As far as I know Brazil is suffering a de-industrialisation process because our industry just can’t compete with the Chinese industry.

Question: How many patents has Brazil registered in the last year compared to China, despite all this money invested?

Money dealing does NOT produce jobs in large scale, all it does is to make the people at the top richer, and the proof of that is that since the beginning of globalization the whole world has experienced a widening of the income gap between the rich and the poor and a concentration of wealth at the top.

These are the issues, in my opinion, that the Brazilian elite should have in mind when working to bring investment to Brazil.

Unfortunately Raymond 1976 has robbed me of the post I was going to write:

"I hope the rest of the article is better researched than the name of streets: Paiva de Ataúlfo is in fact Ataúlfo de Paiva"

The little importance article writers, private equity and hedge funds researchers and similar idiots give to geographic details like this one, Duisberg instead of Duisburg, Tunisia being in the Middle East, and Portugal being in the Mediterranean, seem innocent.

They are not: when hedge funds last year attacked the Euro and the attack on Greece wasn't enough, they opened a second front in Portugal assuming she was a Mediterranean country whose finances were like those of Greece.

Neither was true and the amount lost by hedge funds is just beginning to show its magnitude.

So, for those arguing whether it's time to invest or disinvest in Brazil I'd give this simple advice:

Do whatever your brain advises you but do not, repeat not, base yourselves on hedge fund, private equity or this type of article research.

You'll be lucky if reported facts will be as accurate as street names...

sanmartinian Hedge funds did not "attack".. They've been shorting the likes of Greece/Spain/Portugal/Ireland, for well over 2-3 years. That's perfectly acceptable and indeed they were correct to do so and made a great deal of money from the transaction. It wasn't a problem when those ministers in charge pretended everything was rosey. They were taking irresponsible decisions with their economies and they didn't mind the hedge fund community betting against them when they believed their behaviour was acceptable. Ah but now the hedge fund community made money from the transaction.. it is their fault? What a load of nonsense. They are scapegoats. They are deferring blame onto the hedge fund community so that they don't have to accept responsibility for their actions.

The European ministers who want to ban the truth.. tell you fibs about the "health" of their economies despite debt ratios being off the chart and paying like Greece did at one point over 7% on 2 year money. Your living in utter fantasy land if you want to blame the relatively tiny hedge fund community.

They are ants compared to Insurance and Pension funds. They can say, "The Emperor Has No Clothes" and we need them to do so. Or perhaps you would like to live in a country with hyperinflation?

sanmartinian I forgot to say.. we're probably going to "attack" Italy next.. it's not the unsustainable government finances.. we just don't like the way they play football. We are basing it on the football..

Brazil is overrated. Anyone with money to shop in the posh shopping areas need to dash in and out of the stores straight from their armored cars. You call that a great place to invest?

In august 2009 I poured part of my sparks saving on Vale and Petrobras, at that time Ibovespa was around 39 points now it is around 68 , so I'm very happy with my bet, and I do not intend to sell it, but keep for long future - contrary I'm looking for new opportunities to invest my other saving, maybe property is a good bet but I fear it is already too late,

solventurine when Petrobras was doing it's big ol IPO I got into BG Group around then in a bigger way. Check out the performance. I wouldn't want to own VALE right now.. a lot of downside risk in my view.. Your not getting a good risk/reward at the moment on VALE.. You want to invest in some of the educational companies probably in a short while.. government will probably charge into those education projects... just a hint.. My view! I don't wish to corrupt yours! Kindest Regards