OUT WITH THE OLD YEAR AND IN WITH THE NEW

The financial markets saw 2010 go out on and rang in 2011 on a positive note. Mexican equities once again outperformed the three major US indices. The IPC climbed 27.0%, measured in dollars, in 2010. The Nasdaq, the strongest of the three US indices, gained 16.9%. The Dow rose 11.0% last year while the S&P 500 appreciated 12.8%.

Mexican equities have dramatically outperformed US stocks this decade. Between the final day of 1999 and the last day of 2010, the Bolsa index soared 315.9% in dollars. The Dow did the best of the US indices: it inched up 0.7%. The S&P 500 and Nasdaq lagged considerably, losing 9.4% and 34.8%, respectively.

The IPC’s spectacular gains over the last eleven years may be reason to suppose that it is due for a period of underperformance. The dominant market position of many of the firms that comprise the IPC are reason to think otherwise.

Unless the Europeans fail to preserve the Euro or the Mexican government abandons its decades’ long commitment to macro stability, investors in Mexico should prosper.