Brazil is back in the investment news cycle.

It’s recently been labeled a natural resources superpower, a food production superpower, and a water superpower.

With commodity prices on the rise, Wall Street wants in on Brazilian businesses.

As an American who lives in Brazil and owns Brazilian stocks, I want to share the number one reason I wouldn’t buy the hype, along with the ideal time to purchase Brazilian equities.

Brazil was a major investment theme in the early 2010s during the 2000s commodities boom. In 2011, for example, the USD/BRL exchange rate was 1 U.S. dollar to 1.53 Brazilian reals.

At the time of writing, 15 years later, the exchange rate sits closer to 1 U.S. dollar to 5 Brazilian reals, even after the real’s recent rally.

When I was looking at houses in Brazil last year, I was surprised to learn that, when priced in dollars, real estate in major markets has remained flat for over a decade. In some cases, housing has actually lost value. Imagine buying a place in New York that never appreciates due to extreme currency debasement.

This isn’t unique to Brazil, Argentina has plenty of cheap properties for the same reason, but it’s something Brazil bulls tend to ignore.

If you buy Brazilian stocks during a boom, it can take years to recover your initial investment, even with dividends.

Take Ambev S.A. ($ABEV), for example. It’s a well-run beer and beverage producer that owns and distributes popular brands like Skol and Antarctica. The company has very little debt and, in a more stable economy, would be viewed as a safe-haven consumer staple. But because of Brazil’s volatile currency, the stock is down more than 40% over the past decade.

Investors who bought the 2021 mini-rally in Brazilian equities are essentially flat today, with shares up only about 10.35% over the past five years.

On a personal note, I’ve owned Brazilian utility firm COPEL since early 2021. I use electricity generated by the company and often visit the hydroelectric dams it operates. When I bought the stock, it was trading around $6 per share and paid a 27% starting dividend due to special distributions.

Since then, the yield has come down, though COPEL continues to pay solid dividends in the 6% range, and the stock only doubled in late March of this year.

These returns aren’t terrible, COPEL slightly outperformed the S&P 500, but the gains were almost entirely dependent on timing and external factors. A year ago, COPEL was still trading under $7 per share. Renewed interest in Brazil and commodities is what lifted the stock. Without that shift, it would have remained flat.

The best time to buy Brazilian stocks is when nobody wants them.

Brazil bulls are right about one thing: the country is incredibly rich in natural resources. But the key is to buy these companies when they’re profitable and overlooked, not when they’re the center of attention.

In August 2025, I reviewed Vale S.A., the world’s largest producer of iron ore and nickel. It’s a multibillion-dollar business dating back to 1942.

At the time, Vale had a low payout ratio, a high yield, and was trading at a price to earnings ratio of just 5.69. Brazilian stocks were out of favor, and commodities weren’t yet a mainstream investment theme.

“[W]ith the company’s stock currently hovering around $10 per share, I’d be interested in building a position for both the high starting yield and long-term capital appreciation potential,” I wrote.

Today, Vale trades around $17.75.

Similarly, Brazilian oil giant Petrobras spent most of 2025 trading between $11 and $12 per share. Once oil prices surged, the stock jumped above $20.

The time to buy these stocks is when nobody else wants them and you can get an enormous starting yield from a business that’s trading at a price to earnings ratio of 4 or 5. When commodities surge and Brazilian equities go parabolic, that’s a good time to sit on the sidelines.

The iShares MSCI Brazil ETF ($EWZ) traded at $78 during the 2010 commodities boom. By 2016, it had fallen to $20. Today, it sits around $42.

Brazil is a commodities-driven economy, which makes it inherently cyclical, and also tricky to navigate. I’d avoid buying into the hype.

But when commodity prices settle and Brazilian equities fall out of favor, opportunities emerge. You can find high-quality businesses trading at extremely low valuations, often generating 7–10% starting yields.

When this happens, you also have a growth catalyst, since share prices should rebound once the next commodity bull run begins.

Despite an exciting bull run, gold fell 25% from its January peak.

Bloomberg's Marcus Ashworth said it this week: "No more reliable safe havens."

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.