I was reading an article enticingly entitled “Boost Your Returns” in the latest issue of SmartMoney magazine.  My eyes skimmed down to a section on certificates of deposit.  I like CD’s.  They’re FDIC insured and provide a small but certain return.

CD’s as derivatives

But, whoa, not these CD’s.  The SmartMoney article is about CD’s that are indexed to various assets.  One highlighted CD is pegged to the value of BRIC currencies.  If the value of the foreign currencies rise, I receive an interest rate that is a portion of this growth.  If the currencies fall, relative to the dollar, then I receive no interest, but I do get the principal back at the end of the term.   Huh?  Why would I want to do this?  What does the average person know about the Brazilian real, Russian ruble, Indian rupee, or Chinese renminbi?  And by average, of course, I mean me. Continue Reading »

Brazil, Russia, India, and China.  Together they have 40% of the world’s population and generate 27% of the world’s GDP.  The average annual GDP growth of a BRIC nation was greater than 7% (before the recession), as compared to approximately 2% for a G-7 nation.  Tremendous growth can create significant profits for successful companies.

How can you capture some of this opportunity in your portfolio? Continue Reading »