Global Markets: The Good, the Bad, the Ugly

China yes, America no, Brazil absolutely: That's the current investment mood of one of the foremost global investment minds, Jim Rogers, who after moving to Singapore in September recently returned to America to promote his fourth book, "A Bull in China," offering insight into the smartest ways to invest in the world's fastest-growing economy.

The outspoken, highly opinionated global money manager, who made millions in the Quantum Fund, a hedge fund he and George Soros founded in the 1960s, laid out to me what he considers the good, the bad, and the ugly of the world's major markets. It's noteworthy that he goes against the grain by offering only mixed investment reviews of the highly popular BRIC countries — Brazil, Russia, India, and China.

His overwhelming favorite is the torrid Chinese market, although he says he wouldn't be a buyer at this juncture because of the giant run-up in many of the stocks. In recent weeks, the Chinese market has been blitzed by about a 20% correction, and Mr. Rogers's strategy would be to buy on further weakness, favoring companies related to water treatment, transportation, and agriculture.

His personal portfolio of Chinese stocks, notably those that trade in America, includes Alibaba, Air China, China Southern, and China Eastern.

Mr. Rogers takes a dim view of India: "It's too anti-capitalism, too anti-foreigners, too bureaucratic, and its market is too expensive," he says. "It's not for me." Wal-Mart, he notes, has stores all over in China, but can't open any in India because it's against the law.

He's also shunning Russia, which he predicts will start to fall apart. "You have capitalism, but it's really outlawed," he says. "If you're in with President Putin, you're okay; if not, you're going to get killed."

One of his favorite overseas stars, Brazil, is rich in the commodities China is desperate for, Mr. Rogers notes. As such, he says he thinks the country will continue to be a solid haven for growth-minded investors.

Commodities, in fact, are one of his top investments, and he's been buying up depressed agricultural products. Among his favorites are sugar, which is 85% below its all-time high; cotton, which is off 50% from its peak, and coffee, down 70% from its high. Heightening the appeal of commodities, he points out that the number of acres devoted to wheat farming has been declining for 30 years; likewise, food investing is at the lowest level since 1972.

One of his favorite commodity plays is exchange-traded notes (something comparable to an exchange-traded fund), which represents a stake in an underlying commodity. Here, he's partial to a note that trades on the American Stock Exchange under the symbol RJA.

He's also a buyer of a number of beaten-down currencies, notably the Japanese yen, the Swiss franc, and the Chinese renminbi.

Our global investor, whom I caught up with a few months ago before his Singapore move, reiterates his belief that the American market is rife with growing risk. He notes that a number of industries here — housing, autos, and the financial sector — are already caught in what he calls "worse than a recession," which he sees as a forerunner to an overall general recession. The economy has been strong for six years and historically, he points out, the country has run afoul of a recession every five or six years. Adding to the economic woes is his view that the housing and subprime mortgage crises will worsen.

As a result, he tells me, "I would not be buying American stocks now because I think the market will be heading down sharply."

Given this view, he's short (a bet on falling stock prices) the leading investment banks through an exchanged-traded fund that trades under the symbol XBD. He's also short Citigroup, Fannie Mae, and top homebuilders — this despite their substantial declines.

On the other hand, he owns some small banks that he says "were too dumb to buy subprime paper," as he sees a wave of takeovers in this area. With a steep yield curve (a combination of very low short rates and very high long rates), he notes such conservative banks make a lot of money. Small utilities are also thought to be ripe for buyouts.

The 65-year-old money manager, though old enough for Social Security and Medicare, is not too old to expand his family. He has a 4-year-old daughter, Hilton, whom, he says, has learned to speak fluent Chinese, and he will become the father of a second child in March. He has also expanded his international horizons by adding a residence in Vienna, Austria.

His view of life, which is the strategy he pursues: "Life is short, so drive hard and far, and make it happen."

dandordan@aol.com