What if you bought Argentine government bonds in 2000?
Bonds & cash · Government. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0.5× · S&P 500 same money: $4,626
$1,000 in Argentine government bonds at the start of 2000 would be worth about $450 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
What happened: Argentine government bonds defaulted in 2001 (and 2014, and 2020).
The story
Argentine government bonds have offered generous coupons for a reason. Through the 1990s the peso was pegged one-to-one to the dollar, and the government borrowed heavily abroad to sustain it. By 2001 recession, capital flight and a frozen banking system (the "corralito", which limited cash withdrawals) led to riots and a default on roughly 100 billion dollars of debt, then the largest sovereign default in history. The peg was abandoned in early 2002.
Restructurings in 2005 and 2010 offered creditors new bonds worth a fraction of the old ones. Most accepted, but holdout funds led by Elliott Management sued in New York and won, which led to a further technical default in 2014 until a new government settled in 2016. A year later Argentina even sold a 100-year bond to eager investors. In 2020 it defaulted again and restructured once more. The table shows how little of the original value an investor from 2000 had recovered decades later.
The lesson: A high yield is usually a price for risk, not a gift, and serial defaulters tend to keep their habits regardless of what bond buyers hope.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $100 | $450 | $4,626 | 0.5× |
| 2003 | $25.00 | $1,800 | $7,727 | 1.8× |
| 2005 | $30.00 | $1,500 | $5,763 | 1.5× |
| 2007 | $35.00 | $1,286 | $4,789 | 1.3× |
| 2008 | $30.00 | $1,500 | $4,626 | 1.5× |
| 2010 | $40.00 | $1,125 | $6,071 | 1.1× |
| 2012 | $42.00 | $1,071 | $5,312 | 1.1× |
| 2015 | $45.00 | $1,000 | $3,301 | 1.0× |
| 2018 | $50.00 | $900 | $2,519 | 0.9× |
| 2020 | $40.00 | $1,125 | $2,092 | 1.1× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2003, turning $1,000 into $1,800. The S&P 500 from that same year: $7,727.
On this day
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. Argentine government bonds is one of 258 positions on the wheel — including the ones that went to zero.
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