But I’m a positive guy. And I look at the past to project the future, so I’m going to go back 20 years to the year 2002. Precisely in May 2002, where this note from Ámbito Financiero illustrates us with the prices of Bontes, sovereign bonds issued before the disaster at the end of 2001 and which are in full default after the country’s financial collapse and the passage of 1/ 1 to 3/1 with five presidents in one week. I remind you, I’m a positive guy. and patriot. So, excited about the Korea-Japan World Cup that is about to start with an Argentina led by Loco Bielsa that fills me with hope, I decide to grab $1,000 and buy all the bonuses I can. What if we get out of default?
With a dollar trading at $3.20 and a 2003 Bonte in the order of $0.62 (the price was $62 per sheet of 100 bonds), I bought 5,161 2003 Bontes (its ticker was TY03). The bond matured the following year, but it was in default, as I just told you. So I buy the vouchers, I keep them in a drawer (bah, actually I leave them with the client, who is here, I’m warning you, sir, that you should always take care of her) and I sit on the couch to wait for the World Cup. Batistuta or Crespo? I would have put both, but the Fool thought differently.
But enough of football. This is for money. So after Svensson’s goal and the World Cup failure (Pablito Cavallero could have done something else, it seems to me), the years begin to pass. 2003 is leaving, Boca wins the Libertadores but my bonuses still don’t give me a handle. 2004 is leaving, the National Team wins the Olympic Games and I still haven’t received a penny in rent. Was I wrong in 2002 as Bielsa did by not bringing Riquelme?
However, 2005 arrives. And at the beginning of the year, THE SOVEREIGN DEBT SWAP OFFER IS OFFICIAL! Almost three years after my purchase, I will be able to redeem those Bontecitos. It is true that in 2004 the offer had already been made, but it was only published on 01/12/2005. So I sit down, read it and decide which is the best alternative of all those offered to me. Finally, I opt for the 67% write-off option to receive Discount Bonds ($DICA) and a proportion of Securities tied to GDP ($TVPA). In numbers, in exchange for delivering my Bontes, I receive a combination of 1,703 $DICA + 5,057 $TVPA, at a rate of 2.97 $TVPA for each $DICA received.
But I am very optimistic. And as a certain economist would say, “I believe in DICA, I love DICA and I bet on DICA”. So as soon as I receive everything, I sell the $TVPA and with the money I receive I buy more $DICAs. In total, I have 1,969 beautiful 2033 Discount Bonds. The bond starts trading on 06/08/2005 at $2.70 with one dollar at $2.90. So if I measure my holdings in dollars, my starting $1,000 is now $1,946. I’m 95% up. I LOVE MY DICA’s.
And this is where the Dicaneta starts in all its splendor. The bond begins to pay interest twice a year and since I love this bond, logically I reinvest the money I receive to buy more bonds. Between 2005 and 2007, the dollar did not move as the bond rose a little in value. I accumulate. In 2007, Roman lifted the Libertadores and I ended the year as follows: 2,318 bonds at $3.05 with one dollar at $3.15. I have $2,245 and I’ve already doubled what I invested. I am the best investor in the world, I feel like a capo. I wonder why I didn’t sell the house, the car and even the dog to buy all the DICAs in the world.
2008 arrives. Olympic year. And of subprime crisis. And selloff worldwide. The thing is that my DICAs are not saved from the world disarray caused by the US crisis (you can see The Big Short for more details, good movie). The year is ending and my bonds are worth $1.34, less than half of what they were worth last year. My holdings are $994. I’m back to square one. Good thing I didn’t sell the house, car, and dog. I’m a cautious, logical guy, you have to diversify, not put all your eggs in the same basket, blah blah blah.
But luckily, as Julio Humberto would say, everything happens. A year later, in 2009, the bond closed at $3.70 with a dollar in the order of $3.80. I already have 2,761 bonds worth $2,688. The following two years, everything remains pretty much the same, since there were no big movements in either the dollar or parities. 2011 ends, Messi ends the year with 58 goals and I already have 3,084 bonds worth US$3,335. The dollar is worth $4.30. The party is complete.
However, as of 2012 some problems begin with the exchange rate. Little problems that apparently still persist, we could say. In that year, the CFK government comes up with a brilliant idea to try to calm the waters: put restrictions on the purchase of dollars through a tax that raises the exchange rate for those who want to buy and that can then be deducted. of earnings. Excellent initiative! However, the bonitos finished the year quite well, trading above the value of the dollar. Keep the party going, because I already have $3,841.
In 2013, the trap is tightened. From 15% it goes to 35%, so the capped dollar closes the year at $8.29. But my bonds are still unscathed, trading at $11. My initial investment nails 4.5X and I already have 3,464 bonds worth $4,597. The following year ends in the same vein. The dollar is still 35% in and my bonds are worth $4,391.
2015 arrives. Mauricio wins and the stocks go to the dollar at the end of the year. Bonds are happy with the arrival of Franco’s son and end the year with parity above 100%. I already have 3,945 bonuses totaling $6,235. Yes, I started with $1000 and now I have 6 times more. I should have sold the house, the car and the dog, I think again.
2016, 2017. Years go by, River celebrates titles with Gallardo and Boquita still hasn’t won the Seventh. Luckily, I have consolation in the bonds. 2017 ends, I look at the principal and my 4,409 DICAs are worth US$6,935. Almost 7 lucardas, but how good we are. We have to sell everything and buy more DICAs, I call my mom, my dad, my brothers, my primary school teacher and tell them to buy DICAs. Nothing can go wrong, we live in the abundance of Don Mauricio. At the New Year’s Eve dinner, I talk to all the relatives and I see how my uncle’s eyes shine when I tell him that I multiplied by SEVEN what I invested.
But, but, but… No tree grew to the sky. We arrive at 2018. Sampaoli directs the Selection. Salvio plays at right back against Iceland. It’s already a bad omen. The dollar issue is starting to get complicated again. The $18.61 with which we ended 2017 begins to climb. $20, $22, $26… I’m going to Madrid. We lose the final. I return to Buenos Aires and open the client. u$s5454. I lost 20% compared to last year. I meet my uncle at Christmas. He tells me that he listened to me and sold a boat to buy DICAs. He doesn’t look very happy from the other side of the table. “There will be revenge”, I thought internally. I’m sure next year we’ll win the Cup and the guy buys a yacht with the bonus proceeds.
But, but, but… 2019 is not a great year to say. Until 6/30, more to less we are taking it. But the second quarter is complicated strongly. In August the PASO arrive and the dollar goes to hell, while the bonds are made ointment. In October we were left out of the Libertadores again against the cousins and at the end of the month Alberto wins the elections. The bonds enter a virtual default, while prior to the end of the year, the tax on the purchase of dollars returns, this time at 30%. Brilliant idea.
On 12/30/19, the DICA must pay rent, but no longer does. 06/30/2019 was the last day my faithful friend paid a coupon. I decide to open the principal, prior to the New Year’s Eve dinner. My uncle will be there, surely. I have 5119 bonds, which are worth $42.66. But the dollar went to $81.90, so my balance is $2,666. Half of what he had the year before. I go to dinner, my uncle is up 20 kilos and he no longer has hair. Who knows why, right? At least he no longer spends money to put gas in the boat, I think. He doesn’t greet me, maybe he had a bad day.
2020 is coming. The pandemic is coming. I lock myself in to watch series while I wait for the bonds to move. But they don’t, on the contrary. The dollar keeps rising and I keep watching my investment skim. Until August 4 arrives. That day, the tweet of love, from the Ministry of Economy: THERE IS AN AGREEMENT FOR THE RESTRUCTURING OF THE BOND DEBT. Buttery party in the Argentine ADRs, with Banco Galicia touching US$14.94. A spirit tells me “everything they give you you have to take with you”. I sit down, serve myself an appetizer and start studying the different alternatives that are presented to me. In the confinement of my room, I decide to choose the option of AL41 + AL29, the new bonds. In this case, I get 140 AL41 + 7.9 AL29 for every 100 DICA I give.
The final number leaves me with 7178 AL41 and 402 AL29 in the principal. Only a month and a half after the announcement of the agreement (or known in the Twitter world as THE BEST – RIP Ozono), the bonds begin to trade. The AL41 starts trading at 44 cents on the dollar, while the AL29 starts at 57 cents. I grab the calculator, and the number I see makes me calmer: $3,387. It is not to throw butter on the ceiling, but it is 27% more than it had at the beginning of the year. I trade my AL29s for more AL41s, because I love the long haul. And so I face the rest of the year. I have 7700 AL41 under my arm and I have faith that it will always shine, and the light of my papers will never go out.
However, it turns off. It seems that THE BEST did not turn out to be as good as it was thought. Barely a month after starting to trade, my bonds are balled up and fall between 15% and 20%. The happiness of going out again after the quarantine is contrasted with the depression of seeing my client depreciate nonstop.
The year ends and with that my painful path seeing how the bonds do not rise. The balance at the end of December is not good: u$s2764. At dinner, my uncle doesn’t even come. Adduces an upset stomach. Surely he got stuffed at Christmas and is not whole enough to eat big again. I say, it is a hypothesis.
We enter 2021. Hope. Esperancita. Uneasiness. That is the evolution of the state of mind that I transit during the year. Bonds from which nobody expects anything end up doing nothing. And my bonus, which closed 2020 at 35 cents, a year later it does so at 36 cents. Nothing has changed, my friend. Of course, on July 9 he paid me interest. How many? 0.11%. No mistake, it’s what you paid for. I received US$8.50 in interest, which I obviously used to buy 24 more bonds and end the year with 7,724 papers equivalent to US$2,780.
2022 starts. I take advantage of the preview and go to Mardel. I rest a bit, clear my head and decide not to open the client until May 13, the date on which it will be 20 years since I put up $1,000 and bought the BONTEs, which I exchanged for DICAs, which I in turn exchanged for AL41s. Because of course, if I don’t open the client, then I didn’t lose. I come back from the sea, I dedicate myself to work and to see my dear Boquita, until Friday the 13th arrives. I make a little coffee with the whole family sleeping and I go into my stockbroker.
The AL41 is worth 32.3 cents on the dollar. My 7,724 pellets are $2,494. Oh, but on top of that I’ve been collecting interest while watching the churros vendor go by in the Bristol. This time, it was 1.25%, equivalent to $96. So, I have $2,590. I take a sip of coffee, and I think that the 20-year trip wasn’t that bad, although in the middle I’ve surely earned my uncle’s hatred.
After all, my initial investment of $1,000 is now worth $2,590. In the middle, I got to have much more than that, but on balance, my investment went up more than 100%. I beat US inflation (at least for now) and my purchasing power grew. I decide that on Monday I sell everything, and so I do.
Now, I have $2,590 fresh in the savings account. I decide to leave the silver fresh until August. I get up on Monday and go to see how the markets are to choose where to put those dollars again. Cryptocurrencies? American indices? A garage? I open Twitter and read the bond parities. Again, they are in the 20% zone, like 20 years ago. What if history repeats itself? What if Roman calls me? What if we go back to 100% parity like five years ago? The BUY AL30 button looks at me fondly.
I think of my family. I think of Guzman. I think of my uncle. I think of Roman.
And I give him buy, because after all, money and fear, I never had.
Source: Ambito
