Financial World Shaken, Not Stirred, By Jim Rogers’ Comments
No stranger to controversy, legendary investor Jim Rogers created quite a stir this week in the world of finance. Speaking at the two-day Asian Financial Forum in Hong Kong, the former partner of George Soros in the Quantum Fund told the 1,000 or so bankers and investors:
• “The money has left America. America is no longer where the money is. The money is in Asia,” Rogers told the audience.
• Asia is going to be the financial and political center of the world in the future.
• China, like the United States in the 19th century, may experience setbacks during its rise to power.
• The U.S. dollar may be replaced by the Chinese renminbi as the world’s reserve currency as soon as 15 years from now. Rogers cited the fact that China is now the largest creditor nation in the world, while the United States is the world’s biggest debtor nation.
• Washington is purposely trying to devalue the U.S. dollar by “turning on the printing presses.”
• The U.S. government’s plan to bail out the U.S. economy by printing more money and boosting consumption could lead to even bigger problem. “The idea that you can solve a period of excessive borrowing and consumption with more borrowing and more consumption and destroying more balance sheets, to me, is ludicrous on its face.”
• Protectionism, one of the key pillars of U.S. President Barrack Obama’s presidential campaign platform, could push the U.S. economy into a long depression.
The CEO of Rogers Holdings also talked investments with those attending the forum. He said:
• “The only way you make money historically in a period like this is you find an area where the fundamentals are not impaired. The only area I know like this is in commodities.” Rogers pointed out that the supply of commodities has generally been declining while demand continues to rise.
• Commodity prices have fallen recently, but as Western governments fire up the printing presses, prices will rise for everything from oil and gas to foodstuffs.
• While he likes the Japanese yen, he is bearish on the U.S. dollar, bonds, and stocks.
• He intends to unload all his dollars at some point in 2009.
• He believes the bond market rally, particularly in the United States, will end badly. He told attendees, “If you are a bond portfolio manager, I suggest you find another job.”
• He also said equities will not rise again to the levels seen prior to the financial crisis, and expects them to trade within a narrow range for years to come. In fact, he advised, “If you are an equities investor, start getting out.”
• Besides commodities and yen, Rogers said he favored Chinese stocks, particularly those having to do with agriculture, power generation, tourism, and water treatment. The Singapore-base investor is so impressed with agriculture that he told those at the forum, “If any of you have MBAs, I would rush out and see if you can exchange it for an agriculture degree.”
On Tuesday, Jim Rogers also spoke to Bloomberg’s Paul Gordon about the outlook for the U.K. economy and the pound. He told Gordon:
For the last 26 years, the U.K. has been selling oil, the North Sea. That’s what’s saved the U.K. in the past three decades. It’s finished. The North Sea oil is running out. Within the decade, the U.K. will be importing oil again. And then they’ve got nothing to sell… I mean, again, I hate to say it, but I would not put any money in the U.K. I’ve sold all of my sterling…
As expected, the British authorities were not pleased to hear such comments.
Sources:
“Rogers remains bullish on China”
Duncan Mavin
Financial Post (Canada), January 19, 2009
“Crisis boosts Rogers’ resolve on China, commodities”
Rita Raagas De Ramos
Asian Investor (UK), January 20, 2009
“Jim Rogers sees Renminbi replacing US Dollar as world reserve
Currency”
Business Intelligence Middle East (UAE), January 20, 2009
Jim Rogers Interview
Bloomberg, January 20, 2009
