RISK: TAKE OR MAKE?: H vs L Investors

It is all a matter of preferences: H for "High" Risk Preferences vs L for "Low" ones:

Trouble makers create risk on the investment supply side. Their offerings should be fit for risk-takers on the demand side: those investors that play the risk game. Risk will always exist and must always be part of the H vs L modeling of portfolios for Aggressive (H) investors vs Conservative (L) ones.

A "k" investor (I) can be appointed as Ik={H,L].

When an "i" person, household, family, community, city, region, country, subcontinent, continent, or global alliance decides to design an investment project, program, or portfolio, the first thing to decide is if the offer will be directed towards two bounds of demand (two sets of decision-makers and investors) who are H or L.

Choosing to provide for H or L will be a transcendental decision for human life: it will affect personal and family behavior, public institutions building, market-shaping, visible culture, and international perception of a specific society.

We all vote in the supermarkets when we take health risks in our buying of goods and services, the same as we all choose risk when we vote in the public sphere for policymakers that are aggressive trouble makers or conservative lions.

We choose how to behave in order to become stable and trustable:

Risk takers are experts in aggressive policies, revolutions, war, violence, crime, mafia, and politics. It is a matter of measuring macro and micro risks that will materialize after all that in the short or medium run. Depending on the project, even in the long run, risk-taking is a bet against the odds, a lottery that converts risk into a bet against probabilities. Even Venezuela has investors in its markets:

https://larepublica.pe/economia/2022/02/16/bloomberg-peru-desplaza-a-chile-y-ahora-es-la-economia-mas-estable-de-america-latina/

There are only two countries in the region that have more than (50+1)% of probability of being stable: Peru and Chile, in its order.

Chile used to be the top one, but it has chosen trouble at the hour of voting for public policies since 2019. For 2022, the expected effects create a memory of what happened 50 years ago:

It is true that Chilean inflation was almost 800%, but it did not compare to Argentinian inflation in the 70s, that rose over 20000% between the 80s and the 90s:

While Argentina and other countries suffered from ill policies, Chile created a society that abandoned risk since the beginning of the 1970s when inflation rose to almost 800%. Other South American countries, such as Argentina, Colombia, Peru, the very same Venezuela, plus Uruguay, Paraguay, Bolivia, and Ecuador sent their students to specialize in Chilean Fiscal and Monetary Policies, and Economics in the past.

Other countries, such as Ecuador, learned during the 90s, when democracy returned to Chile, the advantages of following stable policies and creating stability in institutions, in special in the Central Bank, in order to combat depreciation. Argentina tried with convertibility, but at the end of the day, the persistence of the voting for trouble makers made that during the last 25 years, the country would not go very well:

Since 2000, Argentina chose socialism of the 21st century as its major voting preference, with the exception of Mauricio Macri, a businessman and politician who served as the President of Argentina from 2015 to 2019. Evidence shows that his term was worse in inflation than the top inflation during 2000-2005, when Néstor Carlos Kirchner Jr, a lawyer, and politician served as the President of Argentina (2003 to 2007) after being Governor of Santa Cruz Province.

The Argentinian case shows that Risk is not a political matter of Left vs Right, but a matter of institutions: H vs L. If voters choose H, if culture chooses H, and if society chooses to behave as H instead of L, then violence will become the norm, and inflation will be the result.

That analysis can be applied to Chile since 2019:

Violence, crime, noise, trouble, death, and political incongruence have become the norm in Chile since 2019 when the population decided to walk towards the revolution that the country is living today under the dealings of left, center, and right in politics. Again, the result is instability, emission of savings to the streets, and inflation. Chilean congresspeople chose bad policies, and Chilean voters chose bad policymakers that are trouble-makers, and therefore, risk in Chile remains L compared to other Latin-American countries but can become H if it keeps growing towards 2% in 2022, as it grew to near 1.5% in 2021:

Bolivia, Costa Rica, Ecuador, Guatemala, and Mexico are the countries where risk is becoming L, while Dominican Republic, Argentina, Brazil, Chile, Colombia, El Salvador, Honduras, and Paraguay are the countries (in the picture above) where risk is becoming H.

In South America, the country in the picture that grew most (more than 1 point) towards becoming H is Argentina (the picture does not include Venezuela or Uruguay, Peru and Panama, all countries going H except Uruguay that went L from 1.35 to 1.33 from January to September 2021). Venezuela grew H and H from 248% to 311%, the same as El Salvador (not South American) that grew from 6.6% to 10.3%, even with a Dollarized Economy (they have chosen Crypto Currencies as a matter of monetary policy, ruining their stability).

The country that went most L (reduced from 12.73% to 8.38%), is Ecuador, a Dollarized economy that has kept inflation low since 2000, even with the impact of trouble makers in the scene (recently, the former controller of the country during socialism of the 21st century was captured in the USA and should have a fee of 18 million US$ for walking free again in Miami) during 2006-2017:

During the last 50 years, Ecuador reached only once inflation higher than 100% (low as a peak, compared to the peak of 800% of Chile in the 70s, and the peak of 20000% of Argentina in the 80s-90s. Since its Dollarization, inflation has gone lower than 10% (for more than 20 years so far). So far, so good:

During the last 5 years of uncertainty, and with a second revolution trying to take the power in 2019, Ecuador managed to keep L in Inflation, below 1% and has shown 3% inflation during the Covid19 crisis because it has no chance of printing any money. Chile, as shown before, reached almost 4% during 2020, and now shows 8% of inflation, at the end of the Pandemia.

Chile grows in inflation by over 8%, and Peru grows in inflation by 7%

Ecuador is abandoning COVID19 recession without Inflation, leaving behind even negative inflation for reaching a projected average of 2% for 2022-2023:

Investing in times of post-pandemic and pre-war requires wisdom. China and Ecuador are the countries getting as strong in their currencies like the US Dollar (which Ecuador uses since January 2000 as its official currency):

While Argentina plays a H risk game, and Colombia creates uncertainty about the coming elections, Peru and Chile are the countries that still have more stability. Anyway, Ecuador is going increasingly L, while in the South of the Pacific of America is going H:

In times of war, conservative investors are appreciating Ecuador, Costa Rica and Uruguay as the most stable countries for the next 2-3 years.