Friday, January 18, 2008


I want to analyze the EWZ etf for myself and my friend Boris.

EWZ: ETF that corresponds generally to the price and yield performance of publicly traded securities in the Brazilian market, as measured by the MSCI Brazil index. The fund normally invests at least 95% of assets in the securities of its underlying index and in ADRs based on the securities in its underlying index.

CompanySymbol% Assets
Banco Itau Holding FinanceiraN/A4.99
Companhia Siderurgica NacionalN/A2.33
Petroleo BrasileiroN/A11.49
Petroleo Brasileiro Sa PetrobrasN/A13.61
Unibanco-Uniao DeN/A4.28
Vale Overseas Limited ADRN/A10.37

Recent performance (9 month, daily):

We see that EWZ has SIGNIFICANTLY outperformed the US indexes. However, it is very close to key support. If support holds then hopefully it will continue to outperform the US indexes. I was recommending that Boris have a hedged position in EWZ by also going short the QQQQ. You can do this buy having a 50/50 position in EWZ/PSQ. You can actually do this better with an ultra short QID but the allocations would need to differ for this. If you want to be half long EWZ and half short QQQQ the best mixture would be:

EWZ: 66.6%
QID: 33.3%

This way since QID is ultra, a 1% move in QQQQ will result in a 2% move in QID, which will balance a 1% move in EWZ.
However, if you want to be more bearish you could also go for a 60%, 40% mix.
Here is a look of the recent performance comparing EWS with PSQ, if u had a 50/50 mix (or 66.6/33.3 EWZ/QID mix) your average gain would be the average of the two gains.

5 Days:


10 Days:


1 Month:


3 Month:


Note: these are all approximate gains.