Saturday, January 15, 2011

Am I Being Naive?

The question always comes up, "Aren't you worried about living in Mexico?" Frank Holmes,chief executive officer and chief investment officer of U.S. Global Investors Inc. that manages approximately $4.8 billion in 13 no-load mutual funds and for other advisory clients, has written an article titled Is Mexico a Country on Fire? Is the country going to the hell of drug dealers kidnapping for ransoms? Actually, Holmes says that as the economy in the U.S. goes, the Mexican economy is leveraged to ours. If the U.S. grows at 3%, Mexico will grow at 4.5% to 5%.

The Mexican BOLSA is up 20% in the last three months, total monthly exports are at a new record high, and "retail sales as of October,  posted a 4.4 percent year-over-year change—more than twice the level seen in July."  Mexican GDP is upwards of $1 trillion  and public debt is about 25% of GDP as opposed to the U.S. of almost 100% of GDP.  Bill Gross of PIMCO, the largest fixed income investor, advises buying Canadian and Mexican debt and selling U.S. debt.

The one major negative is that "2010 ranks as the deadliest year yet in Mexico’s war against the drug cartels, with 11,041 drug-related deaths as of mid-December, representing a 385 percent increase since 2007, according to global intelligence firm Stratfor."

The high number of deaths is likely a result from the capturing and killing of several kingpins which set off a power struggle among the remaining crooks. You might think this has created a modern-day Tombstone but the law enforcement captures have left many of the cartels significantly weaker.

Am I being naive and overlooking the risk or is Mexico poised to expand and carry its citizens to higher standards of living?

Saturday, January 8, 2011

Where to Go in 2011

NYT picks Loreto, Mexico as one of top 41 places to go in 2011:

Loreto, Mexico
A hideaway with empty beaches, historic architecture and sport fishing gets a luxury resort.

Credit: Adriana Zehbrauskas for The New York Times