Brazil has just offered a clear example. In the first round on October 4, Flávio Bolsonaro beat Lula by less than two points, and investors read it as a signal of greater fiscal discipline. The Ibovespa rose sharply and Nu Holdings, Nubank's parent company, gained more than 11% in a single session.
Three weeks later, Lula won the runoff with close to 52% of the vote. The next day, the Ibovespa plunged almost 14%, a temporary trading halt was triggered and the real depreciated sharply. Nu closed with a drop of nearly 17%.
The revealing part is that Nubank announced nothing new. Its business was the same on Friday as on Monday. What changed was the perception of country risk: investors were not punishing the company, but the economy in which it operates.
The lesson goes beyond Brazil. When the market treats a poll or a first round as a sure result, it piles up positions in a single direction that are then unwound all at once. For Mexico, with elections approaching and the T-MEC review under way, the message is clear. Volatility is not created by democracy, but by excessive betting on its outcome. Investing with discipline means preparing several scenarios, not guessing winners.
