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The yard and the bag.

always interesting to try to draw conclusions studying the behavior of the stock during unusual events. Let's see what happened in Argentina in the yard, and what made the stock at that time.

A brief chronology is as follows:

• Mid 1998: Argentina into recession at the end of the second term of Carlos Menem.
• December 2000: Economy Minister Jose Luis Machinea negotiated a package of 40,000 million dollars to delay payments from the state, who was suffocated. The export sector was badly hit by the fixed exchange rate tied to the dollar (such as Spain linked to the euro, when the peseta was devalued in the things got a bit ugly).
• March 2001: Begins run on deposits.
• June 2001: De la Rua asks for help from the IMF and the banks.
• August 2001: Act "inviolability of the deposits."
• October 2001: 16.3% Unemployment .
• November 2001: Fall 11.6% in industry, construction 18.1%, 27.5% in the automotive industry.
• December 2001: Decree 1570/2001, whereby you can not withdraw more than $ 250 pesos per week or the total of accounts that are in each financial institution. Unable to transfer money abroad, but foreign trade. Argentines feared a departure from convertibility, and was intended to stop a crack bank (as today is English who fear leaving Spain euro). Not surprisingly, these measures were crippled the economy of Argentina and came public debt default of Argentina .
• January 2002: Eduardo Duhalde repealing convertibility. It sets the official exchange rate at 1.4 pesos per dollar. In contrast, keeping the dollar in exchange for a weight of debt.
• February 2002: are transformed dollar deposits into pesos at a rate of 1.4 pesos per dollar. Debts are also converted to pesos, but the change of one peso per dollar. The banks were offset by the asymmetry.
  

Spain would be difficult to return to the penny because the huge housing bubble country has been financed in euros to be in large part to European institutions, and a new devaluation of the peseta hinder the return of such loans unless the State compensate him. We are talking about a English mortgage debt of 700,000 million euros, making it virtually impossible to compensation from the state banks foreign. And for citizens of the mortgage, euro debt growing every devaluation would be unaffordable in many cases.

Rather than draw parallels between Argentina and Spain (any), my intention in this post is to show the behavior of the stock in Argentina, through its Merval index during those turbulent years.




As shown in the chart above, after reaching 869 points, the Merval hit 300 points during the 1998 recession. Came up after 100%!, Until in 2000 and 2001 the economy's problems became more apparent. And so it came to default Argentina's public debt at the end of 2001, the Merval index lost 200 points.

During those months of declines in the stock and total loss of confidence in the economy, the financial system and the government, surely some thought that the "worst was over" and bought stock. The index would fall and they accumulated losses.

would in almost any time upside, as they exist today, except when it came default. That certainly gave in the last bull and sold the last bargain hunter. And obviously, that was the time to buy, and it did was able to multiply their investment by 12.