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No. of Recommendations: 3
It's been an interesting discussion both over there and on the article's comments thread where a former MELI employee posted his critique of my analysis. All told, my experience with emerging markets is that they're extraordinarily volatile -- both the stocks and the underlying markets themselves. Yet when things are going well, people convince themselves that they will keep going well and when they're going badly, people convince themselves they will never get better.

In the case of Brazil, it has a lot going for it, but it remains one one of the world's worst places to do business, with a horrible crime problem, and an upcoming election that will change the political status quo. That's a lot of variables in a market -- particularly when it doesn't take much to undermine a valuation as rich as MELI's. A more onerous corporate tax rate, for example, could do serious damage to MELI's profits -- and we know Latin American politicians don't mind soaking profitable companies.

Tim
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