My Baby Girl

The Daily Reckoning Weekend Edition
November 13-14, 2004
Baltimore, Maryland
By Addison Wiggin and Tom Dyson

Jim Rogers wrapped up the conference yesterday, as always, with a brilliantly entertaining presentation, including slides and a video of his 3-year global odyssey.

"And when we got back to New York in 2001, we were pretty darn tired," recalled the Adventure Capitalist, "so we decided to stay at home and relax a while. And that’s where we received the final surprise…and the best surprise of the whole trip, in fact. We found out my wife, Paige, was pregnant. And now, here she is…my baby girl."

And with that, a picture of Rogers, all smiles, cuddling his daughter, is projected on three giant screens at the front of the ballroom.

"Ahhhh" went the crowd…

When Rogers had finished presenting the slides from his world record-breaking trip, he elaborated on some of his investments, and some of the major themes he’s paying attention to in today’s markets.

"Well, I can tell you, the Chinese are some of the most capitalist people on earth. And it’s a different capitalism to what you might have thought. In China, they save almost 20% of their incomes, compared to 2% here in the U.S. and in China, they don’t worry about how many vacation days they might get, no, they worry about how many days they are allowed to work."

The 19th century belonged to the U.K., once the richest and most powerful nation on earth. The 20th century belonged to the U.S., but the 21st century, predicts Rogers, will belong to China. "I recommend you all start to learn mandarin, and tell your children and grandchildren to do the same…I’m not just saying it either…my baby girl has a Chinese nanny, who only speaks mandarin. And already, my baby girl is starting to pick up some of the words."

Despite his confidence in China’s emergence, Rogers expects a hard landing for China at some point in the next 12 months…

Rogers’ next topic for discussion was the U.S. dollar. "It’s probably overdue for a rally. They’ve been hitting it pretty hard recently. I wouldn’t even be surprised to see a large bounce…but don’t listen to me, my market timing is horrible…"

"What’s much more important, is that Americans owe $8 trillion to the rest of the world," he offers, "and it’s only gonna git worse. The dollar is a fundamentally flawed currency, and still has a long way to fall."

"My baby girl don’t own any dollars. You know what she’s got…a Swiss bank account. That’s right. All her money’s in Swiss francs."

The dollar closed Friday at $1.2972 versus the euro, having made a new intraday high at $1.3004 earlier in the day. The euro has never before traded as high.

For his own account, Rogers owns a basket of 16 international currencies and some Chinese equities. "But if you wanna know where I think the rally big money is, and the best way to play China, it’s natural resources and commodities."

Your editors, here at the Daily Reckoning, wholeheartedly agree. China needs lead. It needs nickel. It needs tin…and rubber and copper and cotton. There’s nothing that can change the basic demand for these commodities over the medium to long term. Nothing. And what this means for you, says the former trading partner of George Soros, well, it will simply be the easiest way to make a lot of money in the coming decade. And when asked by a member of the audience to list his favorite commodities, Rogers named sugar, cotton and orange juice, in that order.

"My baby girl won’t be selling her portfolio of commodities until oil hits $150 a barrel and they’re drilling on the front lawn of the White House. Or until cotton hits $4 and they’re growing it in Central Park."

Oil fell over 5% last week, closing at $47.32, providing a boon for the stock market. The Dow is now in positive territory for the year, having gained 151 points last week. The Industrials Index closed at 10,539. The S&P and the Nasdaq were also higher. The Nasdaq gained 46 to 2,085 while the S&P closed up 18 to 1,184.

"What about gold?" asked another member of the audience, as gold was hitting a fresh 16-year high, gaining $4.50 on the week to close at $437.90.

"My baby girl owns gold too…" came the reply.

Regards,

Tom Dyson,
The Daily Reckoning
November 13, 2004

P.S. Kevin Kerr is another commodity bug. Not only does he understand the fundamental reasons behind this fabulous nascent bull market, but he used to trade in the commodity pits, so he knows exactly how to position his subscribers for maximum exposure with minimal risk. Kevin has already helped his subscribers to a 36% gain in O.J. and a 30% gain in coffee. But that’s small fry when compared to some of his triple digit winners in the energy sector…

— Daily Reckoning Book Of The Week —

Adventure Capitalist by Jim Rogers

We love Jim Rogers. We loved his first book, Investment Biker, and we loved his second book, Adventure Capitalist. He’s made shed-loads of money in the markets, and with his great no-nonsense style, and superb knowledge of the planet – he’s traveled round the world twice in a motor vehicle – he really is a man that serious investors should pay attention to.

But more importantly, even if you have absolutely no interest in the markets or in Jim’s views on where you should invest your money, Adventure Capitalist is still a great read.

It’s a great travel adventure!

Jim Rogers covers 116 different countries in a three-year road-trip – putting him in the Guinness Book of World Records. He uses his experiences to impart his unique investing wisdom and show you how to profit from this ever-changing world.

THIS WEEK in THE DAILY RECKONING

REMEMBRANCE DAY 11/12/04
By Bill Bonner

"But then, war – like markets, politics and team sports – has a logic of it’s own. It is a public spectacle, not a private one. Masses of people are stirred up – mobs, groups, and crowds – to do the most remarkable and preposterous things."

IF WE PLAY OUR CARDS RIGHT…          11/11/04
By Doug Casey

"The reality is that Americans thoroughly endorsed what Baby Bush stands for. So let’s play the cards the way they’ve been dealt. And, perpetual optimist that I am, I think the next four years stand to be among the most profitable of a lifetime for a minority of properly positioned investors and speculators."

A MANIPULATED MARKET 11/10/04
By John Mauldin

"Currencies are a manipulated market. They are manipulated by the central banks of sovereign nations, who make decisions about what the level their own currency should be for the own economic and political purposes. That makes them volatile and very difficult to predict in the short term. In the long term, the markets work."

PROFITABLE TUMBLEWEEDS 11/9/04
By Steve Sjuggerud

"Natural resources are cheap and plentiful too. Pablo’s Northern Orion is a partner in Alumbrera, a world-class copper mine where copper is mined cheaper than anywhere in the world. Literally, the net cost of production is zero, or (unbelievably) less… thanks to gold being a byproduct of copper production."

THE JOKE’S ON US 11/8/04
By The Mogambo Guru

"Apparently this Liu guy is unaware that the reason that I am on the floor, twitching and gagging in fear, is this inflation thing. Then, without warning, as if to kick me in the guts, he gets into this issue of the Fed hedonic massaging of inflation statistics so as to disguise it…"

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HEADLINE, NEWS And INSIGHT:

Pawns in the Public Spectacle
by Bill Bonner

"There is no going back. Once the madness begins – whether it is a war or a bubble – it must run its course. In fact, early victories and early profits typically reinforce the trend. That is why, in war and speculation, it is often better to lose the first encounter than win it; it might make you reconsider."

A Hard Landing for the United States
by Dr Kurt Richebächer

"Mr. Greenspan likes to claim that, thanks to his brilliant policy, the U.S. economy experienced its mildest recession during the whole postwar period in 2001. If this was an achievement, it was more than offset, however, by the following unusually sluggish recovery."

How High Can The Euro Rise?
by John Mauldin

"Speaking of ebb and flow, the dollar is not on some permanent downward path. It will find a bottom, probably ridiculously low, the trade deficit thing will get sorted out and then the dollar will start to rise."