For the last 26 years, the U.K. has been selling oil, the North Sea. That’s what’s saved the U.K. in the past three decades. It’s finished. The North Sea oil is running out. Within the decade, the U.K. will be importing oil again. And then they’ve got nothing to sell… I mean, again, I hate to say it, but I would not put any money in the U.K. I’ve sold all of my sterling…

Claer Barrett, who listened to the Singapore-based investor speak on BBC Radio 4 this morning, talked about Rogers and the pound on the website for British financial publication Investors Chronicle. Barrett reported:

In January, he famously stated that the pound was “doomed”, stating; “I would urge you to sell any sterling you might have. It’s finished.” Despite the pound’s recent recovery against the dollar, he maintains his robust views.

“I still expect it to be doomed,” he said. “Throughout history, major currencies have lost their status. The problem is, the pound and the US dollar are both terribly flawed currencies right now and they may go down together.”

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Barrett also pointed out that Rogers, who correctly predicted the most recent commodities bull market would begin in 1999, is unshaken in his belief that hard assets, along with emerging markets, is where investors will make money. From the piece:

The real opportunities remain commodities and emerging markets. “I continue to think that real assets are the best place to be because that’s where the shortages continue to develop,” he added. “If the world economy develops and gets better as Mr Geithner says, then obviously raw materials will be the best beneficiary. If the world does not get better, raw materials will still be the best beneficiary because the governments are printing so much money all over the world, and throughout history that has led to higher prices.”

Source:

“Bank rescues impoverish us all – Jim Rogers”
Claer Barrett
Investors Chronicle (UK), July 14, 2009

We meet Gross in a Chicago hotel room prior to his giving a speech. The billionaire has just finished ironing his own shirt; he fears the suite’s lack of a minibar might represent “the new normal” in a world where consumers and investors will have to make do with less. Gross has been deeply involved in the government’s efforts to revive the economy. But while he acknowledges the need for the new financial regulations the White House recently proposed, snail-like growth will be the price of that safety net. “The next four to 12 years will not be investor-friendly,” he says. The new cosmic order involves 8 percent unemployment, anemic single-digit annual stock market increases, and ultimately, once the short-term economic crisis is over, higher inflation.

Granted, the master of bonds can seem excessively gloomy about stocks. After the tech bubble collapsed, Gross predicted the Dow would sink to 5000. “I’m still waiting for that,” says Daniel Moisand, former president of the Financial Planning Association. But Gross sees a major role for stocks in a slower economy. Investors should seek stable income from stocks that pay good dividends like Coca-Cola and Procter & Gamble. He also recommends a bond portfolio focusing on high-rated companies like Dow Chemical or AT&T.

After that, it’s time to hunker down. “Give up the notion that the Dow is going to 14000,” says Gross, or “that the house is going to catch up in value to what you paid for it.” The world has changed, he says, because we consumed too much and saved too little.

SmartMoney staff pointed out a few investments that the founder and co-chief investment officer of PIMCO likes. From the article:

Short-term bonds of Dow Chemical and AT&T.

To boost his portfolio’s income, Gross is focusing on high-quality corporate bonds with interest rates of 7 to 8 percent.

Treasury Inflation- Protected Securities (TIPS).

With the government facing deficits for the foreseeable future, investors will need an inflation hedge.

Source:

“What the World’s Greatest Investors Are Saying Now: An Overview”
SmartMoney, July 14, 2009

Indonesian stocks, the fourth-best performers in the world this year, may get a further boost from a likely landslide election victory for President Susilo Bambang Yudhoyono, Templeton Asset Management Ltd.’s Mark Mobius said.

Yudhoyono, who won 62 percent of the 19 million votes counted so far for his second presidential term, has pledged to place economic prosperity at the top of his agenda, Mobius said.

Indonesian equities remain the “third- or fourth-cheapest” in the region, said Mobius, who helps oversee $20 billion in emerging markets as executive chairman of Templeton.

“A strong mandate for President SBY bodes well for the market,” Singapore-based Mobius said in an emailed response to queries, referring to the president by his initials. “This should lead to a lowering of Indonesia’s risk premium, stronger growth and a more stable currency.”

Jakarta, Indonesia

Chen added that the emerging markets legend thinks the Indonesian president will needs to address one problem in particular for the nation to prosper. From the piece:

“The need to eliminate corruption from the top down should be priority number one,” Mobius said.

Source:

“Mobius Says Yudhoyono’s Mandate Bodes Well for Stocks (Update1)”
Shiyin Chen
Bloomberg, July 13, 2009

Looking at the Argentina economy, it is expected to contract by about 1.2% in 2009. In addition, the current account balance is projected to shift to a deficit of 0.5% of Gross Domestic Product (GDP) this year from an estimated surplus of 1.4% of GDP in 2008 mainly due to weaker commodity export prices.

By March 2009, Argentina’s stock market had declined 72% from its peak in June 2008. It had recovered by 24% by the end of May but the economic prognosis is not good as a result of a poor political and economic environment. Economic activity has been slowing rapidly, a reflection of the weak international markets, deterioration in confidence, and declining real income.

Argentina is an agricultural country but is now suffering from the worst drought in more than 50 years. Government income is being hit by the economic slowdown and downward trend in agricultural prices internationally as well as reduced export revenues.

The pesos continues to weaken and has depreciated 13% since September of last year despite central bank intervention to slow the decline. The government’s international debt has been in default since 2001 and now they plan to use its international reserves to repay the Paris Club1. There is US$30 billion in debt to private creditors that remains in default.

Despite the gloomy economic outlook for Argentina, Dr. Mobius did manage to uncover some potential bright spots. He wrote:

During our trip, we visited one of the country’s major telephone companies. The telecommunications sector has proven to be defensive in a negative economic environment. While in periods of economic expansion, telecommunications have grown two and a half times faster than GDP growth in recent years, the company has historically been able to grow moderately in periods of economic downturns.

Buenos Aires, Argentina

Banks, too, may warrant a look by investors. From the piece:

In the banking sector, our visit to one of Argentina’s largest private banks indicated that most banks reported solid operations in 2008…

The bank believes that lending rates will remain high at the 17% level compared to the 19% experienced in 2008. It also expects margins to be maintained. The current spread is 7.1%. The bank is projecting system loan and deposits to grow 10% year-on-year in nominal terms, below the level of inflation. The level of loans for the bank is expected to remain the same in 2009 as the demand for loans from individuals has slowed dramatically. Loans expanded 10% year-on-year during 2008. Credit card loans grew 54% year-on-year in 2008. In this segment, the bank expects to face a 3% non-performing loan ratio.

Mobius concluded:

Ending our visit to Argentina, we concluded that although the political and economic environment was not good, there were a number of companies that may be able to surmount those difficulties and actually prosper because of these problems by increasing market share.

Source:

“Mark Mobius: A postcard from Argentina”
Mark Mobius
Citywire (UK), July 10, 2009

Texas oil tycoon and clean-energy pitchman T. Boone Pickens may be looking to develop a wind farm in Wisconsin, now that his proposal for the largest wind farm in the world is on hold.

Pickens said this week he’s backing off a plan to build a 657-turbine wind farm on the Texas Panhandle. Pickens later said the project isn’t canceled, only delayed a few years. But with his turbines already on order, Pickens told the Dallas Morning News he’s exploring the possibility of developing a series of smaller wind projects around the country.

Wisconsin is one of the states he’ll consider building a project, he said. The largest wind farm operating in Wisconsin, the Blue Sky Green Field wind farm built by We Energies, has 88 turbines.

Source:

“Does Pickens’ Plan B include Wisconsin?”
Thomas Content
Milwaukee Journal Sentinel, July 9, 2009

Billionaire George Soros called China “a positive force” that will help drive growth as the world emerges from the current economic crisis.

“For China, the crisis is something affecting them from the outside,” said Soros, 78, in a Bloomberg Radio interview. “They can stimulate their economy. They have reserves. They have a trade surplus. They will be one of the motors of the world economy.”

Soros, who is no longer involved in the day-to-day operation of his $24 billion New York-based Soros Fund Management LLC, has said the growth rate of the last 25 years won’t resume.

The former partner of Jim Rogers in the famous Quantum Fund also said that U.S. financial institutions may hold back any economy recovery. From the piece:

Soros warned that the current crisis won’t be solved only by boosting consumer and business confidence. U.S. banks are still holding a lot of bad assets and that will weigh on the economy, he said.

“There is a part of reality that can’t be manipulated,” he said.

Source:

“Soros Says China Will Help World Economy Recover From Recession”
Katherine Burton, Thomas R. Keene
Bloomberg, July 8, 2009

Nebraska native Buffett, known as the “Oracle of Omaha” for his long history of prescient stock picks, said that despite the talk of recent economic “green shoots,” he couldn’t predict when the flagging economy would bounce back.

“We are not in a freefall, but we are not in a recovery either,” Buffett said. “We were in a freefall really in the last quarter of last year, starting in the financial markets and spreading to the economy, and we had this huge change in behavior. That change hasn’t changed.”

The U.S. unemployment rate, which currently stands at 9.5 percent, still “has a ways to go” before it peaks, he said. His own company, he said, had to lay off 500 people.

“We didn’t want to do it, and if we saw things coming back we wouldn’t do it,” he said.

Source:

“Warren Buffett Backs Second Stimulus”
Bianna Golodryga, Alice Gomstyn
ABC News, July 9, 2009

Templeton Asset Management’s veteran fund manager Mark Mobius said on Wednesday it envisaged investing $1 billion in Turkey in the next two to three years.

Prior to the crisis, its total investment in Turkey was around $2 billion but has since come down to about $1 billion, he told a conference in Istanbul.

‘As money comes in and investors are more interested in higher revenue-generating investments, this could go back up $1 billion in two to three years’ time,’ he said.

Investment in Turkey has been hit by the global economic crisis, which has also slashed domestic economic activity. The economy shrank 13.8 percent in the first quarter of the year.

However, Mobius said the crisis had not hit Turkey so hard and that he remained positive on the country’s outlook.

Istanbul, Turkey, business district

Senerdem discussed Mobius’ existing holdings in more detail. From the piece:

Mobius told Reuters that a half of his company’s portfolio in Turkey was in banking shares. It has also invested in Turkish Airlines, manufacturing and retail companies.

Source:

“UPDATE 1-Mobius sees $1 bln Turkey investment within 2-3 yrs”
Melis Senerdem
Reuters, July 8, 2009

Publicly traded companies in Thailand are trading at just 11 times estimated 2009 earnings, making them the second- cheapest in Asia after Pakistan. They currently offer a dividend yield that averages 4.7 percent compared with 3 percent for U.S. stocks and as little as 1 percent for Chinese equities, according to data compiled by Bloomberg. That makes Thailand a buy, says Marc Faber, who manages $300 million in Asian shares at Hong Kong-based Marc Faber Ltd.

“I can get here relatively recession-resistant businesses that are well run with a dividend yield of 6 percent or 7 percent,” says Faber, publisher of the Gloom, Boom & Doom Report, who has been buying shares in Thai banks and food producers this year. “If you buy good businesses, it would be most unusual if you did not make good money in 5 or 10 years. And with these dividends, in Thailand you are paid to wait.”

Source:

“Losing King Bhumibol Concerns Don’t Deter Faber Bet on Thailand”
William Mellor, Daniel Ten Kate
Bloomberg, July 8, 2009

Oil prices are likely to hit $75 a barrel this year, and rise further next year, T. Boone Pickens, founder and Chairman of BP Capital Management, told CNBC Tuesday.

“We’re going to see $75,” Pickens told “Squawk Box.”

Prices can go as high as $85 or even $88 in 2010, he said, and did not rule out a new run to $145 for oil.

Source:

“Oil May Hit $75: Pickens”
CNBC, July 7, 2009

After spinning his wheels with his Sears-Kmart gambles, Eddie Lampert is now cashing out smartly on his bet on auto-parts chain AutoZone.

The billionaire investor, whose personal fortune dived by more than half in the past two years to $2 billion, has been selling large blocks of AutoZone stock for as much as double what he paid.

In the past three weeks, Lampert and his key investors unloaded more than $538 million in AutoZone for hefty gains as their shares soared to new highs near $170.

Despite the recession, AutoZone stock has climbed steadily all year, due to forecasts that consumers will invest in fixing up their cars instead of buying new ones…

Lampert is the chain’s largest shareholder, controlling 20.9 million shares, or 39 percent, with a market value of about $3.2 billion.

Source:

“Lampert Exits The Fast Lane”
Paul Tharp
New York Post, July 7, 2009

The dollar and U.S. Treasuries are both likely to slide as soaring government debt in the world’s biggest economy undermines confidence in its assets, according to Jim Rogers, chairman of Rogers Holdings.

“The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency,” he said in a telephone interview today from Singapore. “The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me.”

Rogers, the author of books including “Investment Biker” and “Adventure Capitalist”, said he holds fewer dollars than a year ago and plans to “short U.S. government bonds someday.”

In addition to sharing his outlook on American assets, the former partner of George Soros discussed other currencies, commodities, and equities. Chen added:

Rogers said he recently bought the Swiss franc and within the Asia-Pacific region his currency holdings include yen, Singapore dollars, China’s yuan as well as the Australian and New Zealand dollars…

Rogers, who predicted the start of a global commodities rally in 1999, forecast resources will again climb, saying they are one of the few asset classes where “fundamentals are improving.”

The author of recently-released A Gift to My Children: A Father’s Lessons for Life and Investing said there was only one country’s stock that he is bullish on at this point in time. From the piece:

Stocks in Sri Lanka are the only equities Rogers said he would consider buying at the moment, adding that he plans to hold on to his holdings in China for many years to come…

“Selling Chinese shares in 2009 would be like selling U.S. ones in 1909,” Rogers said. “My children were born in 2003 and 2008 and I expect them to hold my shares someday.” Rogers said he last added to his holdings of Chinese shares in the fourth quarter of 2008 and has not bought any stocks at all this year.

Source:

“Jim Rogers Sells Dollars, Plans to Short Treasuries (Update2)”
Bob Chen
Bloomberg, July 6, 2009