If hindsight is 20/20, what would it tell us about the best and worst investments one could have made in Argentina following the collapse of convertibility and the ensuing crisis in 2001?
Reuben Ramallo of iProfesional recently tested that premise, as four fictional friends met for lunch in Palermo Hollywood to reminisce about the good old days and see who had made the best investment.
Fernando put his money in real estate, Pablo kept his pesos in dollars, Eduardo kept rolling his money over in short-term bank CD’s, while Juan Martin stocked up on gold. The clear winner, says Ramallo, was Juan Martin whose gold bars accumulated 1,613% in peso-denominated value since 2002.
The real estate investor came out in second place, assuming he bought in Capital Federal where peso-denominated values have risen 500% over the last eight years. Third place went to Pablo whose choice of greenbacks would have netted him a 300% gain, while Eduardo’s relatively safe CD play appreciated roughly 160%.
The infamous “inflacion de bolsillo” (pocket inflation) was the key differentiator separating the best and the worst investments. It rose 454% over the period in question meaning those who invested in gold and real estate were the clear winners compared to those whose investments were weighed down by a weakening peso.
The director of ZonaBancos.com says the situation was most volatile in the first year post-Convertibility when the peso dropped from $1.40 to $3.82. In contrast, the past seven years have been much less volatile under the Central Bank’s policy of floating administration. (Full article in Spanish)