An International Affair

Sometimes big changes come in small packages. Like a chainsaw-wielding anarcho-capitalist who took Argentine politics by storm.

By now, you probably know the name Javier Milei. Today, he’s the President of Argentina, sweeping into power in October 2023 on the back of a campaign of massive economic reform in the country.

In the early 1900s, Argentina was one of the ten wealthiest countries in the world. The way it got there was simple: commodities. It became a large exporter of cattle, grain, and wheat to Europe. It was an agricultural powerhouse.

That helped Argentina to account for about 50% of Latin America’s entire gross domestic product by 1913. It was on its way to rivaling the U.S. economy. And it led the French to coin the phrase “riche comme un Argentine”—as rich as an Argentine—when talking about extreme wealth during that period.

But as with all good things, the country lost its way during nearly a century of socialist rule.

While the U.S. and other Western nations boomed after World War II, Argentina went bust. It adopted socialism with the election of Juan Peron as President in 1946.

Peron basically took a page out of Italian fascist Benito Mussolini’s playbook to set up his system of government. It was all about expanding state power and taking it out of the hands of private individuals and businesses.

The effects of these policies devastated the economy over and over again for decades. It faced numerous defaults on its debts. And that ultimately led to chronic inflation and even hyperinflation.

For example, as recently as between 2018 and 2024, inflation ranged from 50% to around 200% per year. That finally broke the dam. The people had enough.

Enter Javier Milei, or “El Loco”, as his friends called him in his youth.

It was his platform and his firebrand personality that eventually swept him into power in late 2023. Once he took office, he immediately got to work.

As promised during his campaign, Milei cut the number of government agencies in half from 18 to nine. He laid off more than 30,000 federal employees. And suspended nearly all public works projects.

Within a year, the country swung from a deficit of about 2.8% of its GDP to a 1.8% surplus.

Milei also cut a lot of government red tape. He slashed more than 300 regulations. And created a 30-year tax holiday scheme for large investments. That helped ease shortages of certain imports.

He also devalued the Argentine peso in December of 2023. Then created a sort of peg to the U.S. dollar. Inflation dropped from 84.5% to just 2.2% within a year.

Initially, there was some pain in the Argentine economy. GDP went from negative 1.4% in the fourth quarter of 2023 to negative 5.2% in the first quarter of 2024.

However, the fourth quarter of 2024 proved Milei’s moves correct. GDP printed a positive 2.1%. That number more than doubled by the first quarter of 2025.

Milei didn’t just revive the country’s economy. Or free it from the shackles of a system that choked it for decades. His policies helped flood the country with outside investment.

We can even see how this played out by looking at the Global X MSCI Argentina ETF (ARGT), which holds a broad basket of Argentine stocks.  

Since Milei took power, the index is up nearly 150%, even after the recent pullback over fears that voters would reject Milei’s reforms in Argentina’s mid-term elections.

But that proved to be wrong. Voters went to the polls last month. The message was clear: they want Milei to stay on course.  

I have no doubt that investors in Argentine stocks will continue to do well over the coming years. And it’s even a trend that premium members of Strategic Trader ultimately benefitted from once already.

Before Milei’s election, we recommended warrants of one of the country’s largest agricultural companies, Cresud. By the time we closed the position, it handed premium members a triple digit gain.

But it’s not just Argentina that may benefit from the Milei effect. Argentina’s neighbors also look poised for change.

When it comes to investing, it’s important to understand that the stock market measures the psychology of its participants. To avoid being sucked in, you need to back away and see the big picture. And today it’s saying that investors should think internationally.

U.S. stocks have dominated world markets since around 2010. So much so that they make up about 50% of the market value of all the stocks around the world. A multi-decade high.

This tells me two things. First, at some point the trend will probably reverse. Second, international stocks have a chance to rise far more than you think.

Consider that back in the late 1980s Japanese stocks were all the rage. They made up about 50% of the world’s market cap. Everyone wanted a piece of Japan.

After hitting that level, the Japanese stock bubble burst. It caught most investors by surprise.

But if all you did was shift your allocation from Japan back to U.S. stocks, you would have made out like a bandit.

In the decade after the Japanese stock bubble burst, the S&P 500 was up about 315%. Meanwhile, Japan’s Nikkei 225 Index fell nearly 50%.

Small shift. Big outcome.

Yet the reason many investors ignore markets outside of the U.S. is because they have what we call a “home country bias.” Which means they only invest in companies inside their home country.

Yet investing in international markets isn’t difficult. It’s just as easy as buying stock in Microsoft or Tesla, for the most part. And finding opportunities right now is all about recognizing cheap international markets. Or countries that are undergoing massive change to help free their economies from corruption or hardline policies of the past. Like Argentina.

Looking at the landscape today, I believe we’ll see more opportunities in South America given the success of Milei.

Think Brazil, Chile and Colombia. All three of them currently have socialist leaning governments. And all of them have elections coming up.

In fact, it’s not hard to get exposure to those three countries through exchange-traded funds (ETFs).

Brazil has the iShares MSCI Brazil ETF (EWZ).

Colombia has the Global X MSCI Colombia ETF (COLO).

And Chile has the iShares MSCI Chile ETF (ECH).

All three of them are easy for any investor to own. All three are trading far below their all-time highs. And all three look like they could break out with just the right push.  

In fact, keep an eye on Chile. The presidential election is coming up on November 16. And right now, polls show the country could swing from a far left, socialist president to more of a Milei-style approach of tax cuts and deregulation.

But South America is just one example. It’s not the only international market looking primed to break out. Which is why slowly but surely, we’ve added some international names in our premium Strategic Trader service by using warrants as a leveraged bet on that trend.

At the end of the day, it can pay to look abroad to get an edge in your portfolio. And in a few years time, you may be glad that you did.

Regards,

Editor, Strategic Trader