[The Second of Two Parts.]
Money Morning/The Money Map Report
VANCOUVER, B.C. – Despite its many problems, China remains such a strong long-term profit play that giving up on that country now would be like selling all your U.S. stocks at the start of the 1900s – before America created massive wealth by evolving into a world superpower, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
"I have never sold any of my Chinese companies," Rogers said. "You know, selling China in 2008 is like selling America in 1908. Sure, let's say the market goes down another 40% – so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908."
During a 40-minute interview during a wealth-management conference
in this West Coast Canadian city last month, Rogers also said that:
- The anti-travel policies China has put in place to reduce gridlock and slash pollution during the Summer Olympic Games may
actually have created a "bottom" in China stocks – possibly creating a great entry point for long-term investors.
- The 34-day worldwide Olympic torch relay leading up to the opening ceremonies likely re-awakened China's deeply felt nationalism – which will be key as that country strives to build demand for its domestically produced products.
- And noted that the country must still deal with such problems as pollution, rising inflation and an overheated economy.
A long-time China bull, Rogers first made a name for himself with The Quantum Fund, a hedge fund that's often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor's 500 Index climbed about 50%.
It was after Rogers "retired" in 1980 that the investing masses first really got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the recently released "A Bull in China." He also made some historic market calls: Rogers predicted China's meteoric growth a good decade before
it became apparent to everyone else, and he subsequently foretold of the powerful updraft in global commodities prices that's fueled a year-long bull market in the agriculture, energy and mining sectors.
Rogers' candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched. Here are
some of the highlights from the exclusive interview we had with the author and investor, who now makes his regular home in Singapore:
Keith Fitz-Gerald (Q): There's a lot of talk that the Chinese will
use the Olympics to launch a new wave of nationalism and to move ahead. Are the Olympic Games as relevant as some
Jim Rogers: They've already got tremendous nationalism. But the international reactions about Tibet and the Olympic torchbearers re-awakened it.
And the politicians, of course, need it because they've got their own problems with
inflation and overheating and [pollution and] the rest of it.
So, like politicians throughout history, they fan it – do their best to say: Hell, it's not our problem. It's the evil farmers. It's the French. See that store over there: It's their fault. It's the Americans."
So that is happening, anyway.
As far as the Olympics themselves, they're irrelevant.
America had the Olympics in
'96 and it had no effect on the American economy – before or after. Some people in Atlanta were affected before and after. And some people who were involved with the Olympics were affected before and after.
America at that time had 270 million people. China's got five times as many people, and it's a much bigger country geographically.
Sydney, Australia had the 2000 Olympics. It had virtually no effect on the Sydney, or on the Australian economy – even though Australia had 18 million people. It's tiny … nothing. Yes, it had an effect on some people.
Greece, in 2004, had the Olympics. You haven't heard stories of a major collapse or a major revival of Greece in 2005, because the fact is that the Games didn't have much of an effect – not a noticeable effect, anyway. It had spot effects only, so I ignore the Olympics as far as the Chinese economy – and its stock market – is concerned.
(Q): Are you still bullish on China?
Rogers: Oh, yeah. I never sold anything in China. In fact, I bought more. I bought Chinese Airlines (PINK: CHAWF) last week. I flew one coming here. Maybe I made a mistake [with the investment], because it was emptier than I thought it would be.
(Q): Any thoughts why?
Rogers: One thing, you know, is that China's made it extremely difficult to get a visa right now. In the past, it's been hard to get a seat because Chinese airlines were so full. On this flight there were empty seats.
That brought home to me that they are cutting back enormously on visas right now. Discouraging travel, trying to clean the air, trying to protect against somebody blowing up the Forbidden City, et cetera. So the fact that planes are empty right now may be smarter than I thought.
Maybe I did get the bottom on the airlines, because if they are going to reissue the visas again, after all this, after September [after the Olympic Games have concluded], then the planes are going to fill up pretty quickly again. I would have picked the stock up at a bottom.
Rogers: Anyway I'm still around China. I have never sold any of my Chinese companies. You know, selling China in 2008 is like selling America in 1908. Sure, let's say the market goes down another 40% – so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.
[Editor's note: After interviewing legendary investor Jim Rogers
at his home in Singapore back in March, Investment Director Keith Fitz-Gerald caught up with Rogers again in July - this time in Vancouver, where both were speaking at the Agora Wealth Symposium. In Part 1 of this two-part series, Rogers talked extensively about the ill-advised bailouts of Bear Stearns, Fannie Mae and Freddie Mac, and the potentially ruinous fallout from the financial "Super Crash" that's about to engulf the U.S. market. In this second installment, Rogers emphasizes China's long-term profit promise - something he highlighted in his recent bestseller, "A Bull in China," which contains detailed research on dozens of China's top stocks. To find out how to get a report on the once-in-a-lifetime profit plays available in China - and how to also get a free copy of "A Bull in China" - please click here. Part 1 of this Money Morning interview with Jim Rogers ran yesterday (Tuesday).]
News and Related Story Links:
Money Morning Exclusive Jim Rogers Interview From Vancouver (Part I):
Exclusive Interview: Jim Rogers Predicts Bigger Financial Shocks Loom, Fueling a Malaise That May Last for Years.
Money Morning Exclusive Jim Rogers Interview From Singapore (Part I):
Jim Rogers: More Pain for the Greenback, and the Failure of the Federal Reserve.
Money Morning Exclusive Interview From Singapore (Part II):
Jim Rogers: China's Economic Advance is All But Unstoppable