Rogers sees worst recession ahead

Exactly a year ago, America’s maverick investor Jim Rogers was quoted by the US media predicting that the dollar and stock markets were bound to collapse at the rate the US Fed was increasing money supply. His forecast has been spot on, so far. Now, this die-hard fan of China is convinced that the world, led by the US, is headed for the worst recession since World War II.

He feels the US government’s protectionist move to bail out the ailing financial institutions - Bear Stearns, Freddie Mac and Fannie Mae - will only add to the chaos. “It is important to allow a beleaguered financial system to crash once to clean up the system,” said Rogers, who co-founded the Quantum Fund with George Soros in the 1960s. He catapulted to fame in the 1970s, when his fund gained 4200% against a relatively modest 50% on the S&P index. Opting for a rather early retirement at 37, Rogers has spent the past three decades managing his own portfolio, while pursuing his other interests that include motorcycling. He even managed a mention in the Guinness Book of World records after touring six continents on his motorcycle in the early-1990s.

The investor, who has moved lock stock and barrel to Singapore last year from New York to back his belief of a prolonged US economic downturn, says he has totally sold out of emerging markets.

“Currently, I am invested in the Swiss Franc, Japanese Yen and airlines,” he said. The optimism in the Swiss Franc and Japanese Yen could be ‘contrarian’, as these currencies have been battered significantly in the recent years because of ‘carry trades’. A carry trade is a strategy where an investor sells a currency with a relatively low interest rate and uses the proceeds to buy another currency with a higher interest rate or high-yielding assets. Till late 2007, investors have been selling both these currencies to invest in emerging markets for higher returns.

“There are set-backs in every bull market, but I think, the best place to invest would be in raw materials and resources,” he said. Talking about potential investments in commodities, Rogers noted that coffee, sugar, cotton, zinc, and maybe, silver, which are far below their highs, could spring surprises.

Though broadly bearish on equities, he sees potential in companies involved in water, agri-commodities and tourism businesses. “Even if America falls off the earth, India’s water problem will not go away. If you are in the water business in India, you will make a huge fortune.”

And does he have big plans for India, if any? In his characteristic dismissive manner, the self-proclaimed ‘Chinophile’ said that he would restrict his exposures for the moment to a road trip across the country that would offer him the delights of a diverse country like India.

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PS- Which are the investment candidates in water management and related businesses. Jain irrigation is certainly one. Views from members..

There are no posts for this section for a long time. Looks like we have limited ideas for this sector.

I bought Mount Everest Mineral Water Ltd on rd recommendation and sold for a 3 bagger after that I did not get any new idea about water related companies.  Ion Exchange (India) Ltd may the one. But don’t know much about the company and the management.

You turn on the faucet, and-voila-you have a drink of water! Those of us who come from western nations tend to take water for granted. However, after a few years in Israel, we appreciate the fact that whatever water we receive is a gift. The media is filled with reports about how the world is running low on crude oil, but not too much attention is paid to the growing water crisis.

Water as an Investment

As abundant as it appears to be, only about 20% of the global population has access to running water.  Additionally, only one-third of the world’s population has access to clean water. In fact, many estimate that in 40 years, more than four billion people, half the world’s population, will be living in areas that are chronically short of water. Moreover, economic development has placed greater pressure than ever on the supply of fresh water. In 1900, the global annual water use per capita was 350 cubic meters. In 2000, that number had grown to 642 cubic meters. In the United States alone, the demand for water has tripled in the past 30 years, while the population has grown by just 50%.

China, Africa and the United States

The need to increase access to clean water around the world has led some to call water the “oil” of this century. As the world becomes more and more developed, wealthy countries will not only be able to afford, but will also have a moral obligation to provide this basic necessity to their citizens. China and India, which are experiencing economic booms right now, are therefore investing hundreds of billions of dollars in improvements to their water infrastructure, while many sub-Saharan African countries that are beginning to show signs of economic growth will soon need to begin to provide basic resources to their population. All three of these examples, are huge populations that are in their infancy when it comes to the basic needs of their citizens. They have been steeped in poverty for decades, and they are emerging only now. As such, they need to start from scratch, which means access to water and building roads.

In terms of the United States, the Environmental Protection Agency estimates that up to $1 trillion will have to be spent on upgrading U.S. water infrastructure over the next few years. Much of the country’s aging infrastructure is more than 100 years old and is in a state of utter disrepair. In the United States alone, the network of drinking water pipes extends more than 700,000 miles - more than four times the length of the National Highway System. This all adds up to the need for new reservoirs, better water canals and more efficient irrigation systems. Israel happens to be a global leader in the innovative technology needed for making such repairs.

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Companies directly into water management area are of course going to be  beneficiaries of this theme.

Flood is now have a seasonal effect all over the country at different time of monsoon. As a country we are wasting lot of our energy, time & money on rescue operation. This will lead us to river linking project. This is a need of hour. Sooner or later this is going to happen.

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Standalone Financial Summary                                                                           Rs. Crore

Disclosures

The author may have held / hold the above-mentioned securities in their personal accounts or on behalf of the clients. The information contained has been obtained from sources believed to be reliable. While taking utmost care in making the report, the authors or the company does not take responsibility for the consequences of the report. All investment and information and opinion are subject to change without notice. The investment recommendations may not be suitable to all the investors.

October 23, 2008

hi Kulman,

this is a nice thread that you started. in fact, i remember how weird i felt, when i noticed people buying mineral water bottles around '98. at that time, most of the foreign-returned guys were the buyers. by today the trend has gradually picked up and most homes started buying drinking water like monthly ration! moreover, i don't think this behaviour is limited to cities only.

IFaith doesn't mean buy blindly. I already told that i have  faith inb company's business that means  business are doing well and growing. If they give good margin in their all business that means they are efficient so i have confidence then faith.

If observed closely one can find that shortage of pure water has already started getting worse and it is bound to get ugly in the years to come. Hence I find water treatement to be the next big thing in the decades to come and want to cash on this opportunity. But the problem is that the only listed company I know in this space(Ion Exchange) is continuously failing to deliver.