View from Hong Kong: Can you still make money in the market?

HONG KONG — Invest in agriculture, infrastructure, power generation and tourism if you want to make money in the coming months and years. That was the message famed investor Jim Rogers recently gave in Hong Kong. Oh, and make sure those investments are in Asia — and you better learn Mandarin while you’re at it, Rogers said.

“In my view the focus of the world is shifting from the West to Asia,” Rogers said in a speech to the Asian Financial Forum in Hong Kong. “Probably the most important thing that’s happening in the world in the 21st century is the rise of China.”

China will suffer setbacks in its rise, Rogers said, much as the United States suffered setbacks in its ascent to the top in the 20th century. China is suffering now, especially Chinese companies that sell to U.S. retailers such as Wal-Mart and Sears.

But China will succeed as the United States did, Rogers argued, because “I know they call themselves communist, but they are among the best capitalists in the world."

Rogers, who in 1970 formed the Quantum Fund with billionaire George Soros, said the world’s money supply and the world’s largest creditor nations are now in Asia.

“Throughout history, when you’ve seen transitions, it’s always been about where the money goes and the money is now in Asia,” Rogers said. “This is going to be the new center of the world, not just the financial world, but the political world as well.”

Rogers said he was bearish on the U.S. dollar because the United States, as recently as 1987, was a creditor nation, but now is the world’s largest debtor nation with $13 trillion in debt, with that debt increasing by $1 trillion every two years.

Saying the United States was actively trying to “debase” its currency, Rogers said, “if I were you I’d be very worried about the U.S. dollar. I am."

Rogers also warned that U.S. and many other governmental bonds are a poor choice for investors.

“I cannot conceive of lending money to the United States. I will tell you that anybody who buys government bonds is making a terrible, terrible mistake,” Rogers said. “If I were you, I’d go home and sell your bonds. And if you happen to be a bond portfolio manager, I would urge you to get another job. You’re in the wrong place at the wrong time.”

Rogers wasn’t much more positive about stocks in general because of what he called political risk involved with the Obama administration.

“The American government is making a terrible mistake. The plan they have is not going to work,” Rogers said. “I don’t see how you can solve the problem of excess lending and excess consumption with more lending and more consumption. It’s ludicrous on its face the path they have chosen. I would prepare yourself to be very worried about what’s going to happen in the future and start preparing to get out if you’re an equity investor.”

Rogers said he didn’t vote for John McCain, the Republican candidate, but criticized the Obama team for the platform on which it ran.

“Obama said he would tax capital,” Rogers said. “Taxing capital in a world where there is a shortage of capital is madness. When things change, he will turn on the financial community. His other platform was that he will protect American workers. We know that in the 1930s, protectionism created the Great Depression.

“Now he has backed away somewhat from those platforms, but I’m extremely worried,” Rogers said. “The change is all very exciting, but the new things are more spending, more debt, more inflation and higher interest rates down the road. I don’t see any signs these guys have a clue what to do.”

One of the few areas Rogers was positive about is commodities, perhaps because he created the Rogers Commodity Index in 1998.

“If you go back and look at history, you will find when we’ve had periods of forced liquidations, the way you make money historically is you find the thing where the fundamentals are unimpaired and that’s what you buy," he said. "The fundamentals of most industries in the world are very impaired by what has happened. But commodities are not impaired. Things are so bad farmers can’t get loans for fertilizer, nobody can get a loan to open a mine. Supply is under pressure at a time when the world is going to continue to eat and do all those things we have to do.

“Once again the world is going through a period where the people who produce real things are going to make money and not the paper-changers in the City of London," Rogers continued. "If any of you have MBAs, I would rush down and see if you can exchange it for an agricultural degree. All those guys on Wall Street or in the city of London driving Maseratis need to learn how to drive a tractor.”