Thursday, December 27, 2007

Hog wild for China: Jim Rogers

Last week Tom Konrad at AltEnergyStocks had a couple posts* referencing Jim Rogers in Fortune but I couldn't find a link. Here it is.
(And here are our posts on Mr. Rogers)

From Fortune:
Legendary investor Jim Rogers made a bundle by anticipating a boom in commodities. Now he's focusing on the People's Republic.

This is the China century," says Jim Rogers, standing amid moving boxes in his opulent Manhattan townhouse. "It's time for them to rule the roost." In fact, the 65-year-old former investment partner of George Soros and globe-circling author of Investment Biker is such a believer in the capitalist momentum of the People's Republic that he recently agreed to sell his beloved home and relocate full-time to Singapore - not quite Shanghai, but close enough to the action. It's something he's been considering at least since 2004, when Fortune last wrote about his remarkable prescience in championing a China-driven, worldwide commodities boom. His new book, A Bull in China: Investing Profitably in the World's Greatest Market (Random House, $26.95), is a how-to guide for investors interested in following him to the Far East. Fortune interrupted his packing for a chat about China, commodities, and the teetering U.S. economy.

You invested in China some time ago. But the market is up 300% over the past three years - why should other investors jump in now?

In the book I specifically make the point two or three times that people need to be careful because there may be a bubble developing in China. Obviously if a bubble develops you don't want to buy anything. But you need to understand that there are gigantic opportunities in China and gigantic changes taking place there. So the book is designed to help people understand in simple language what's happening and where there may be opportunities for one who does his homework. It's not a catalog of hot tips. I'm not yet convinced that there is a bubble, by the way. The Chinese government is doing its best to prevent a bubble. They've raised interest rates five or six times in the past year. But even if a bubble develops and it pops, it's not the end of the Chinese story. China is still going to continue to develop.

Why has the Chinese stock market taken off?

The Chinese have done a very good job [with the economy] over the past 20 years. But the one mistake they've made is they have continued to block the currency and made it nonconvertible. That's causing huge liquidity to develop in the country, and that's causing trouble. It has really intensified in the past two or three years. They've got all this money sloshing around that's been flowing into China and can't get out. It's going into the mainland stock market and driving up prices. It's going into commodities. And it's going into real estate.

How are you investing in China now? Are you buying shares of companies? Indexes? Real estate?>>>MORE

*In "Jim Rogers: What Peak Oil Will Do for Cotton" Tom makes this point:

Cotton is a good way to buy oil-- hear me out. Much apparel has been made from synthetics. Synthetics come from oil. So many textile makers are converting back to natural fibers because oil is at an all-time high. So if you want to buy oil, buy sugar [because it is easy to turn into ethanol], or buy cotton. What I'm buying right now is agriculture.

I hadn't thought of this cotton-oil connection before, and it's drawing these connections before others do that makes a great investor. Incidentally, cotton and oil are also connected more directly via the use of oil to make pesticides and fertilizer, and indirectly when land formerly used to grow cotton is shifted to grain production because of rising ethanol prices, but I think the substitution effect Jim talks about is likely to be strongest....