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August 31, 2003

Commodities Good, Stocks Trash

By Kathryn M. Welling

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Jim Rogers is back. Been back for over a year, in fact.

Enough time to publish his second book, Adventure Capitalist, and have it go into its fifth printing. Enough time for Jim and wife Paige Parker to welcome a daughter and equip her with a passport. Enough time too, for the wily hedge fund veteran to reassess an investment landscape that went from bubble to bust while he canvassed the globe - and to come to characteristically iconoclastic and outspoken conclusions. Remember commodities? Jim does. -KMW

Welcome back. Didn't I see you quoted somewhere saying that your first round-the-world jaunt was more fun?

In the financial sense. During my first trip, I opened a lot of accounts in various countries. This trip, I closed as many accounts as I had opened. Markets in many places are sort of closing up, if you will. It is not good for the world and it is certainly not good for investors. I think we all know that open markets and free trade are best for the world. But unfortunately when things start going wrong a lot of politicians look for the easy way out, look for the Band-Aid to solve problems short-term. Even though that always means bad things long-term. Look at Alan Greenspan.

It must not have been easy to get your head back into economics and the markets-

Actually, I was never really out-of-touch. One of the major changes between this trip and my last was that the telecommunications revolution is definitely real. My last trip, frequently all I could do was send postcards back to the States and hope that people would know I was alive. This time, in every country in the world, there are now phone connections. So we could keep up the Website to our amazement. It was a ground level lesson that yes, the revolution is real even in African villages, even in Siberia, lots of places where before it was almost impossible to make a phone call. So that part of the revolution is real and it continues to grow and expand and will be terrific. But that doesn't mean that a lot of people aren't going to make money out of it.

And it affects ordinary folk, not just ruling elites?

Yes. But by the time you cross a remote border, you know 25 percent or 30 percent of all you need to know about a country. If you then drive across the country, you will know another 25 percent or 30 percent. And if there is no black market, that tells you something is going fairly right.

Where did you discover that sort of good news?

The European countries, Tokyo, Australia are places where there is no black market.

Outside of the developed world, I meant.

There have been black markets in the developed world at times. Whenever anything is restricted. When Britain had exchange controls there was a black market there. When I was at Oxford. At the moment, while there still is a black market in South Korea, it is a pale reflection of its former self. Beyond that, South Korea itself is a very protected economy. It has had a great growth story, but it basically has been through horrible protectionism.

We were talking about short-sighted decisions-