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How to Trade the Cuban Crisis

Buy of Pigs

Posted July 13, 2021

I first saw Cuba in October 1998. Clinton was still president and had relaxed some of the embargo rules. Journalists and healthcare workers were allowed to visit for work although the bureaucrats hadn’t figured out the paperwork.

Nothing was quite official and no one wanted to make a decision, so I snuck in via Canada. In fact, it was a sponsored trip by a Vancouver company with dreams of turning the island into the next Miami Beach — or I should say returning to it.

The venture never worked out. Though the islands on the Caribbean side were popular with the Spanish scuba divers — Castro loved fish and created a massive conservation area — the economy soured after the dot-com bubble, and money was no longer available for Cuban resorts.

Still, I found it a beautiful country on the surface with good food, great architecture, and little crime. Goats and chickens wandered free in the parks and median strips, and homemade crafts added a certain charm.

That said, if you peeked through the cracked veneer, you would notice the poverty and despotism. Livestock were allowed in public spaces by law because the country had trouble feeding itself. There were homemade chairs in the cafés because you either made one yourself or did without.

Revolution in the Air

Castro is long dead.  

This week, there were real protests on the streets of Havana, with people shouting "libertad" and demanding freedom.

But the mainstream media in capitalist democracies pontificate about the U.S. embargo. The BBC and New York Times blame the high food prices and COVID deaths on capitalism.  

They should blame price fixing and Chinese labs.

Communism fails everywhere people try it. In the U.S., affluent protesters wear Castro shirts and play the victim. In Cuba, the incredibly brave, impoverished souls drape themselves in American flags and demand a chance. They lay down their lives for a freedom we piss away.

Perhaps the best way to stick it to the communists is to make money from their demise.

There is no way to trade Cuban stocks directly, but there is a closed-end fund called the Herzfeld Caribbean Basin Fund Inc. (NASDAQ: CUBA).

It purports to buy stocks that benefit from increasing trade and soon-to-be-booming economies in the Caribbean. The stock acts as a proxy for Cuba. That is, when anything positive happens on the island in the way of opening up to more trade, the fund jumps higher.

On Monday, the stock was up 3.33%.  

I have no way of knowing if real reforms will come from the current Cuban protests, but if they do, you could see CUBA, the fund, double from its $6.40 price tag.  Other catalysts include the end of COVID and a pent-up demand for tourism in the Caribbean. The fund also pays a nice 9.86% dividend, so you can get paid while you wait for the end of another failed communist regime.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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