Don't Cry For Me, I have all the Chandeliers

I spent the week in Argentina, a most enterprising place if you are the national government. The current administration, taking a page from the Venezualan playbook nationalized all pension funds sucking billions out of the investment management space. Needless to say, it devastated the pension and hedge fund businesses in Buenos Aires. Now that Brazil is booming, the sentiment is shifting back to the privatization. Funny how the winds change.

Here is a fun tip for those of you who are wondering why there is so much arbitrage in ADRs in the region. Well, my friends, it has absolutely nothing to do with arbitrage at all. In fact, investors expect to lose money. What they gain is access to foreign exchange. With a government that watches money flows at the currency exchanges like a hawk, the only way to move money in and out of Argentina is through equities. Buy a local stock in local currency, trade it for an ADR, and sell it for US dollars. Let's see how long the loop hole lasts!

If you are not traveling for business, I suggest you spend some time buying leather. If you prefer antiques, Buenos Aires has cornered the market on chandeliers. You will never in your life find more in one place. Strange, but true.