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"It looks to me that this is the right time for a bounce..." - Views on News from Equitymaster
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  • Jul 21, 2008 - "It looks to me that this is the right time for a bounce..."

"It looks to me that this is the right time for a bounce..."
Jul 21, 2008

James B. Rogers, Jr. is an American investor and financial commentator. He is co-founder, along with George Soros, of the Quantum Fund, and is a college professor, author, world traveler, economic commentator, and creator of the Rogers International Commodities Index (RICI). You can visit his website at www.jimrogers.com.

On the Economy...

Equitymaster: How do you see the global economy faring in the next couple of years? What in your view is the one factor which could dramatically change the course of the global economy?

Jim Rogers: The global economy in the next year will be affected by the recession in America. And the recession in America is going to be the worst since the second world war. And anybody who does business with America is going to feel the effects of that. Some businesses will not feel the impact of this. So if you are in the water business in China or India you are not going to feel any effects of the recession in America. So it depends what business you are in during that period of time.

Which industry is going to change the most? Well, agriculture is going to change more than any other in the next two - three years. Because that is where the enormous shortages are and where the enormous opportunities are.

Equitymaster: The resilience of the Indian economy is something that is oft spoken of. What are your estimates of economic growth in India, both in the next couple of years, and from a very long term perspective? What do you think are the biggest challenges we face going forward?

Jim Rogers: The biggest challenge is your government. Your government is always making the mistake of getting in the way. India probably will have some growth prospects. There are a billion people there and itís a fairly closed economy. Your government is trying to encourage growth... at least it shows it is. If they try to increase growth, there will be more growth in India.

India is a very difficult place to do business in, whether you are an Indian or a foreigner. So I do not think the pace of growth is going to be great. Itís going to be better than it has been in the past. I think there are better places to do business though - Brazil for instance has natural resources and they are trying to develop their natural resources. They are not trying to prevent natural resources from developing.

The Indian government is not taking the right approach.

On the Stock markets...

Equitymaster: The stock markets, globally, have been in a sell off mode. Valuations have corrected sharply. DO you see buying opportunities emerging? Which markets appeal the most to you now?

Jim Rogers: I bought some airlines recently. But most stock markets are probably about to have a big bounce. Just because they have been beaten down so much. They cannot go down for ever. And it looks to me that this is the right time for a bounce.

And if there is a bounce, I will sell. I said I bought airlines recently, I will probably buy some more.

The countries which will do the best will be the ones that have been beaten down the most. I am short investment bankers in America. I do not plan to cover on this bounce. I will probably add more shorts if they go up enough.

Equitymaster: How do you see the Indian stock markets faring going forward?

Jim Rogers: Well, Indian stock markets have got beaten down a lot. It probably is going to have been a bounce too. But like I said before, the markets that have gotten beaten down the most, will have the best bounce.

I am not a very good short term trader. So I will probably do nothing... but if I see an old fashioned selling climax around the world, then I plan to buy Taiwan, China... just depends on how things develop.

Equitymaster: Are you invested in India?

Jim Rogers: No.

On the Debt Markets...

Equitymaster: From a global perspective how do you see the interest rate environment developing from here on?

Jim Rogers: Interest rates are going higher. We have inflation again in the world. And inflation is going to get worse. So we will have much more inflation and therefore higher interest rates.

Equitymaster: Any opportunities in the debt markets that make investment sense presently?

Jim Rogers: I just sold short government bonds in the US. Thatís an opportunity. I am going to sell short investment banks if they rally. So, yes, there are opportunities out there.

On the Commodity markets...

Equitymaster: The commodity markets have had a fantastic run in the last few years. From an investment perspective, which commodities appeal to you the most?

Jim Rogers: At present it would have to be agriculture. I bought some agriculture recently.

Equitymaster: Whatís your take on crude oil prices?

Jim Rogers: Crude has been very strong and it has doubled in a very short period of time. Whenever such things happen you should be careful for a while. I am no good at market timing so I do not know. What I do know is that things that go straight up usually have a correction. But thatís not a prediction... this is how the markets usually work.

On Real estate...

Equitymaster: Whatís your take on the Indian real estate market?

Jim Rogers: India is gigantic country... if you are talking about a farm in the south then maybe, but if you are talking about the financial district of Mumbai, then No!

On the Currency...

Equitymaster: How do you see the Indian Rupee faring against the other major currencies in the world?

Jim Rogers: I do not pay much attention to this. Your government is always spending money to changing the rules. Itís not a convertible currency as it should be. Your government keeps saying they are going to make it convertible. Itís not a convertible currency so this is a bit academic.

One of the mistakes the Indian government has made is not letting your currency be convertible. India would probably be a more interesting investment destination if they opened the market up, made the currency convertible and made it easy for people to buy shares.

If I want to buy shares in India it is very complicated and difficult. But if I want to buy shares in Germany, I just pick up the phone and buy shares.

On Asset Allocation...

Equitymaster: Assuming that if a person with a high appetite for risk wants to set aside money for a 5 - 10 year period, what kind of an asset allocation would you recommend to him?

Jim Rogers: He should put all his money into commodities in the following currencies - Chinese Renminbi or the Japanese Yen or the Swiss Francs

Equitymaster: How would this allocation change if the personís risk appetite was moderate in comparison?

Jim Rogers: There is not a whole lot of risk investing in any of these currencies and in agricultural commodities as of now. So, the allocation would remain the same.

Equitymaster: Is there any advice you would like to give to investors in India?

Jim Rogers: First advice is you should always invest when people are discouraged, and you should not invest when people are excited and enthusiastic.

Second advice is you should only invest in things you know a lot about yourself. Donít listen to the radio; donít listen to the television; donít listen to the newspapers. And you will be much more successful!

Also Read:

  • Dr Marc Faber - "I would be interested in investing in the physical goods space..."
  • Ajit Dayal - "India is a big buy. India is on sale."

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