Ibov, long term perspective

After a stellar performance in the last one year and a half or so some might be asking if IBOV is running ahead of itself, specially if we take into account all the political turmoil in the recent past and the uncertainties about the next year election. But though recently Ibov reached the historical highs in BRL terms it's still way below in USD terms and relative to other EM markets. The only certainty is that no one knows for sure what is going to happen, so my intention here is just to put the actual levels on a more historical perspective to clarify a bit where we are at this point. And in my humble opinion Ibov still have room to go in the next 2 to 5 years. (if we don't follow a venezuela path of course, but think that risk is low).

Ibov in USD log terms since 1968

removing it from the trend...

5 years annual compound return...

10 years annual compound return...

relative value of the EWZ ETF against EEM...

and finally a simple model to test Ibov (BRL) annual returns against CDS, local interest rate and commodities.

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