Drugs, Gangs, Surf - Now Time for Investors
My El Salvadoran travel companion was an acid licking, weed smoking, direct decedent of the inventor of the atomic bomb.
Yes, that Oppenheimer.
We got paired up by attrition.
I had several close friends scheduled to travel with me from Los Angeles to El Salvador, but they backed out a week before our flight was set to take off.
Their families didn’t feel comfortable with them traveling to one of the most dangerous places on earth.
El Salvador was a no-go location.
Just a couple months before I was scheduled to fly to the Central American country, the FBI created the MS-13 National Gang Task Force.
This was in 2004.
Our El Salvadorian welcoming party.
After my friends backed out I called Oppy, knowing that he might jump at the chance to go on a last minute surf trip.
I was desperate for a travel buddy who could share the potential risks I was facing.
Oppy got held up at security in LAX before we got on the plane. The drug dogs singled him out and he got pulled off into secondary. I’ve never seen that for leaving the US - only when you come back into the country.
I boarded the flight thinking I was going by myself.
When I landed in San Salvador, there was an all-white plane parked next to my now defunct TACA Airlines A320.
There was a stream of men walking down mobile stairs from the white US Government airplane directly to the tarmac. All of the men were dressed in street clothes, with no visible security monitoring them.
Turns out that was one of the early ICE deportation flights running in the early 2000’s, where deportees were simply dropped off in their home country… Many of those deportees would be back in the United States within a matter of months.
It was a circular game of cat and mouse.
When I finally made it through El Salvadorian customs and picked up my board bag, Oppy mysteriously appeared out of nowhere dragging his own board bag behind him.
Maybe the security at LAX figured it’d be easier to just let him go to El Salvador instead of deal with him back in the US… he was deporting himself.
This was over 20 years ago, when El Salvador was still a very dangerous place to go.
But, as any committed surfer knows, that’s usually what comes with the territory when you look for great waves.
Rock Bottom Latin America
I have repeated different varieties of my first El Salvador trip throughout the rest of Latin America over the past two decades. (But just that one with Oppy!)
Peru, Colombia, Chile, Panama, Nicaragua, Guyana, and many more…
There’s no nice way of saying it: They’re all screwed up.
I’ve been robbed by the police in Managua, extorted by jungle gorillas in Parque Tayrona, and attacked by a drunk meth addict in Pavones, to name a few encounters.
Blame it on the Spanish colonialism; or the US regime change imperialism; or the insatiable demand that fuels illicit drug production; or the never-ending attempts of different flavors of Peronism.
Three steps forward, two steps back.
It’s incredibly frustrating when you think about the potential of this region:
Latin America is religiously homogeneous, with 90% of the population identifying as Christian.
They have an incredible work ethic, putting in more hours than nearly every other first world nation.
Their land is incredibly resource rich with oil, timber, copper, gold, silver, lithium, water, and every other element you can think of.
Could this part of the world finally see a turn around?
Latin America Goes Right
You may have seen the recent news about the riots going on in Bolivia.
The former socialist president, Evo Morales, is being accused of rallying protestors to disrupt the newly elected right-leaning President Rodrigo Paz Pereira.
But the story is much more complicated than that.
Leftist groups from Cuba, Mexico, Colombia, and other left leaning countries are likely aiding the Bolivian protestors in their attempts to overthrow the new leadership. It’s likely that the Chinese, Iranians, and Russians are helping their efforts.
The bigger picture is clear: There is a struggle going on in Latin America that seems to be coming to a head.
It’s a struggle between the takers and the doers.
The socialists have had their run over the past several decades, and the results have been unsurprisingly horrible.
Now it’s the capitalists turn.
The only country that has recently, and noticeably, changed direction is Argentina under the leadership of Javier Milei.
Meanwhile, Cuba, Venezuela, and Nicaragua have proven what the world has known for centuries - socialism and communism just don’t work. Ever.
Then you have countries like Ecuador, Colombia, Brazil, Peru, and Chile that have gone through decades of leadership whiplash.
Here is the net result of all of this: Millions of angry people are voting for the only political system that has been proven to work - the one that all first world nations subscribe to.
Over the past couple of years Argentina, Costa Rica, Chile, Bolivia, Ecuador, Honduras, and most notably, El Salvador, have all shifted to the right.
And if this trend continues, there are going to be ENORMOUS opportunities for investors - more than there already are.
Note: If you want to fully understand what is behind this transformation, other than public sentiment, read this…
Primed for Profits
The irony of the riots going on in Bolivia right now should not be ignored.
The rioters are fighting the new government because they think the right wing leadership will exploit the people and resources of the country, leaving the people underserved and ignored.
In reality, that is what has been going on for decades under the left wing leadership that has led Bolivia to economic crisis.
Even more ironic, the rioters don’t understand that the only way that outside investors will benefit from providing capital to Bolivia is if the actual people of the country are lifted up and are successful themselves.
It’s a classic example of how emotional narratives can completely distort the rational principles of economics. Mamdani has done a fantastic job of showing how that works.
Anyway… There are several countries in Latin America that are primed for real economic booms because the populations within those countries may see incredible windfalls in the coming years.
This will mostly be happening because of rising commodity prices. These countries are rich with copper, lithium, zinc, and all of the minerals that are in demand for the build out of the global AI economy.
It helps that over 30% of gold and silver deposits are also found in Latin America.
Rising commodity prices will lift Latin American economies.
Don’t Over Think It
There are hundreds of interesting companies to invest in right now that do business throughout Latin America.
You could go after the tech names like Mercado Libre MELI 0.00%↑ , dLocal DLO 0.00%↑ , Nubank NU 0.00%↑ , StoneCo STNE 0.00%↑ , XP XP 0.00%↑ , Liberty Latin America LILA 0.00%↑ , and many others.
Or you could chase the mining and energy companies like Petrobras PBR 0.00%↑ , Ecopetrol EC 0.00%↑ , YPF YPF 0.00%↑, or Vale VALE 0.00%↑ .
You could make it easier on yourself and just go after the country ETF’s like ECH 0.00%↑ , EPU 0.00%↑ , or EWZ 0.00%↑.
Or you can make it REALLY easy on yourself and just go after the Latin America ETF ILF 0.00%↑.
Literally every single one of these companies (except for a couple of the tech companies) are trading at insanely low valuations and have broken out of long term downward trends.
The early investors are already diving in head first.
And, as I mentioned last week, there are more countries starting to open up:
Where are you going to fall on the adoption curve?
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