Hedge Fund Manager Jim Rogers Says Industry Peaked
Dec. 1 (Bloomberg) -- Jim Rogers, who co-founded the Quantum hedge fund with investor George Soros, said the industry has peaked because stock and bond returns are dwindling and there's a shortage of good money managers.
``I'm not too optimistic about hedge funds because you won't be making a lot of money from stocks in the next 15 to 20 years and bonds will be doing horribly,'' Rogers said today at a hedge fund conference in Tokyo. ``I'm told there are almost 10,000 hedge funds. With overcrowding, there will be some charlatans and incompetence. You can't have that many smart 29-year-olds around.''
Rogers, 62, who co-founded the Quantum Fund in 1970, said most of today's managers made their reputations during the stock market rally of the 1990s. It will be difficult to replicate that success in the future, he said.
Hedge funds are loosely regulated investment pools designed to profit from falling as well as rising market prices. It's the most lucrative and fastest-growing part of the money-management business. Globally, hedge funds attracted more than $100 billion in the first nine months of 2004, boosting the industry's assets to about $890 billion, according to estimates from Tremont Capital Management Inc. in Rye, New York.
Rogers, who retired at the age of 37 with what he said was ``enough money to satisfy a lifelong yearning for adventure,'' said commodities represented the best asset class for investments and China was the best place to make money.
Commodities Rally
``The current bull market in commodities started in 1999, and if you go back in history, the shortest bull-market period was 15 years and the longest was 23 years,'' he said. ``Most commodities like sugar and coffee remain at low prices. Even oil, adjusted for inflation, remains 50 percent below its all-time high.''
An industrywide drop of investments to find oil in Mexico, Alaska and the North Sea will probably drive oil prices higher, Rogers said. Brent crude oil futures for January settlement was down 34 cents, or 0.8 percent, at $45.17 a barrel on London's International Petroleum Exchange at 9:37 a.m. A decade ago, oil cost about $17 a barrel.
The Chinese government will ease its currency peg to the U.S. dollar in the next two to four years ahead of obligations made to the World Trade Organization and its hosting of the 2008 Olympics in Beijing, Rogers said.
`Learning Chinese'
``China realizes it can't become a great country with a blocked currency,'' Rogers said. The yuan, pegged at 8.3 to the U.S. dollar, will appreciate ``a lot'' in the next two decades without hurting China's competitiveness in world trade, he said.
The dollar remains ``a terribly flawed'' currency and Rogers reiterated comments made this year that its value will fall further as the largest debtor nation continues to borrow. ``I assure you it will get worse,'' he said.
To illustrate his convictions in his investment strategies, Rogers said his 18-month old daughter has a Swiss bank account and a full-time Mandarin tutor. ``She's learning Chinese, she's not learning French, for instance.'' |
