market folly

CommodityBullMarket has done an excellent job of jotting down notes from Jim Rogers' recent interview with the FT. Here are some important points they highlighted:

"Part 1 - Global recession will be long and deep.

• He has not yet exited his US dollar positions, as he believes the current rally is an artificial one driven by short covering.
• It could go longer and higher than anyone expects.
• Reiterated his opinion that the US dollar is a flawed and maybe doomed currency.
  
• We're going to have the worst recession since World War II
• Likely we'll see exchange controls at some point in the US
  

Part 2 - Market correction is good for commodities.

• The way to make money now is to buy the things where the fundamentals have been unimpaired.
• Not only are the fundamentals of commodities unimpaired, but they have been strengthened, as supply is going to take a serious hit across the board as a result of tight credit markets.
• "Farmers can't get loans for fertilizer now."
• In the 30's, commodities hit bottom first because there was no supply. The same thing happened in the 1970's - again because there was no supply.
  

Part 3 - China economic story still intact.

• "Selling China in 2008 would be like selling America in 1908. You might have looked good in the short term...but who cares?"
• He bought more Chinese shares in Oct/Nov of this year.
• Also believes the fundamentals of China will come out of this recession unimpaired.

Part 4 - Inflation is coming - you'd better own real assets.

• We're following the mistakes of Japan by bailing everyone out.
• This is the first time in world history that every government in the world is printing money.
• It will lead to much, much higher prices.
• Don't sell your gold, cotton, or sugar, because prices will be much, much higher in a few years.
• We are not experiencing deflation - this is forced liquidation. We're fighting the wrong battle by fighting deflation."