'No bubble burst danger' for investment in Brazil
Date added: 8th February, 2010 at 09:19
(view all articles from February, 2010)
People can avoid the dangers of financial bubbles by making an investment in Brazil, a financial expert has advised.
Andrew Menachem, wealth advisor at The Menachem Group at Morgan Stanley Smith Barney, said making an investment in Brazil was likely to be a safe option, in an article for the Miami Herald.
He explained that financial bubbles form when the price of an asset inflates after investors rush to buy into it. The bubble then bursts when the value of the asset collapses.
However, growing economies do not necessarily suffer from these bubbles.
He said: "A change in economic conditions, government regulations, foreign exchange rates or other factors can produce sustainable increases in value."
Making an investment in Brazil would fit into this description, with the Latin American country benefiting from recent discoveries of oil.
One company that has recently made a major investment in Brazil is the oil giant Shell, which will spend $1.625 billion (£1 billion) in cash over the next two years.
Shell will join forces with Cosan SA Industria & Comercio to make the investment in Brazil's natural resources.