Against Jim Rogers
on "Jim Rogers on Russia"

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#1:

I am that Mr. Alimov you are discussing. In the interest of full disclosure, Rogers came to HBS class and made several insulting comments about Russia and Russian people in front of 100 of my classmates backed up by "facts" that had nothing to do with reality. When I politely corrected his factual claims, he called me incompetent and left, which set the tone for my first email. As you will see from my emails, I did not try to convince him to invest in Russia (that decision is complex and investor-specific), I simply wanted to get the facts straight. Little did I know that he would write several pages of personal insults in return. As far as facts under discussion, they are pretty well established and I addressed each of his claims in my response.

#2:

Dear John D., for your reference I started my comment with the words "Mr. Rogers, with all due respect..." which I don't think is impolite. By the way, thank you for telling me what my "job" is. I realize that you have a view on how to approach people like Mr. Rogers and I respect that. However, in this case not only were his facts inaccurate, he also made insulting comments about the country which I call my home. Imagine for a second that you were in school in Europe and someone started badmouthing the US using bogus facts? Would you focus on "elegance" or would you correct that person?

Finally, if you are in fact one of my classmates who was at the talk (which I am not sure you are), why didn't you have the courage to write me directly or at least identify yourself?

#3

Dear Dmitry,
I have just come across your "constructive discussion" with Mr. Rogers. I was a little surprised to see your original e-mail. Although constructive it was not “pleasant”. But it was nothing comparing to Roger's response. To say the truth, I could hardly believe my eyes. Or is that the way a world celebrity should react to a “gullible lad” who “can neither read nor comprehend what he reads”?
I also happen to have some relation to Russian macro situation monitoring (and that is why to the issues of statistics quality too). So, the topic of your debate was very engaging. It is difficult to judge since I am not sure what time horizon Mr. Rogers refers his arguments to. But it strongly looks like he still has a 1998 impression of Russia. Looks like he does not take into account that the situation (at least macroeconomically) is very different now. It is not clear to me why would one want to take historical data (for previous 9 years) to assess future perspectives of the country that came though such a tremendous transitional shock. What relevance do 5-year-old events have to the ruble future performance without referring to the factors that determined that performance 5 years ago and discussing how they have changed/ didn’t change. His comment about oil price and Russian oil production was just marvelous! Enjoyed it a lot. I wonder how many freshman students of Economics might have said the same.
It is very nice to see that there are courageous people to challenge “legendary investors”. So, please accept my sympathy.
I never though about reading Roger’s book. But after reading that “great piece” for Roger’s response, I think I might change my mindJ It is now interesting to see what the person who could present only very weak and emotion-based points about Russia has to say about other countries he visited in his yellow Mercedes.

Regards from Moscow,
Olga

#4

EPO / E Corbin / James N

You are pathetic bitter loser(s). If anyone is insecure, that's you. It is easy to hide behind fake names and insult someone who has the balls to question Rogers' bullshit (did you read the emails and did you check the facts???). I am surprised that this blog did not delete your comments - they have zero substance and they use the same obsene language Rogers used. That's a shame...

#5

This blogger's initial caption of this story: "If you're going to make
a complete fool of yourself, don't do it in an email that you send to
thirty people. And if you're going to call an international authority
an idiot regarding his topic of expertise, be exceedingly sure that
you have your facts straight" - struck me as truly bizarre.

Dmitry Alimov's letter was a bit testy, but nothing out of line in such
academic dispute (neither he called Jim Rogers an idiot, although the
latter behaved like one). I myself attended hundreds of talks and
conferences at MIT (where I've got my Ph.D.), Harvard and other places,
where such tone is considered quite normal. Neither it is unusual for
the mainstream media. There are, for example, Opeds and editorials every
day in Wall Street Journal that are ten times crankier.

D. Alimov presents figures, references and factual data. One could find
them convincing or not (personally I agree with him, but can respect an
opposite - if informed - opinion). But Jim Roger's response was nothing
like that. It spends 90% of space in personal insults and crude self-promotion.

J.R. could choose not to reply at all, if he didn't have much to say on the
subject, instead he started pompous rants, with very little substance.
And in rare instances when he is not throwing insults, he is unconvincing.
Just one of his phrases: "if Russian oil production is really up so much,
why is the price of oil still so high?" - any Economics-101 student will
be ridiculed for such "argument".

I myself was investing in Russia for the last several years, doing very
well there - precisely by NOT listening to people like Jim Rogers.

I've came across this exchange after it was mentioned and discussed in one
Internet forum for seasoned emerging market investors (with participants
from many different countries). The opinion was unanimous: J. Rogers has
shown himself a complete fool.

About Russia he is uninformed to a preposterous degree. I remember one of
his travel articles on Moscow-Siberia trip a few years ago (I think it was
in the "Worth" magazine), where claimed among other things that most
Russians live in houses without any plumbing or modern amenities. This
struck me as quite odd and plain silly, but then I've seen in the article
where this claim came from: it was based not on any factual data, but on
impression he's got looking out of the window of a train or a car. He didn't
realize that most of what he've seen on the roadside were dachas (often
just simple toolsheds or small wooden dwellings with separate outhouses),
not people's primary residences!

So much for his "deep" insight. Jim Rogers is laughable.

#6

Dear Dmitry,

I am sure you have been, by now, inundated with e-mails of support after that truly amazing missive from that little twerp Rogers. I can assure you that it is provoking great mirth around Moscow.

The man is arrogant, rude and ignorant to a degree even beyond that to which I have become accustomed after a long career in finance. I have never met him - but from his letter, I imagine him very short, and having great difficulty getting laid. His comically insecure arrogance is reminiscent of the Proust's pathetic Baron de Charlus. Profound insecurity transpires everywhere; he is driven to continually remind us of his brilliance, with the corollary that anyone who disagrees with him is not merely misinformed, but is indeed a total fool, deserving only of his scorn. Common courtesy seems alien to him.

Yes, he can drive a bike; indeed, he has made some money (he repeatedly reminds us of what a genius he is - although perhaps "Fooled by Randomness" would be a rather better reference than "Money Masters of our Time."). What I wonder is whether he has put his money where his mouth is and shorted Russia, beginning in 1999. Perhaps he shorted the bonds - after a 1000% rise even such a genius as he must be getting a bit nervous! Perhaps Yukos, now a $30 bn company after its 3000% percent rise was also on his shorts list.I don't usually suffer from Shadensfreude, but I admit that I almost hope so. Ordinarily, I would not stoop to arguments ad hominem, but Rogers' rudeness goes far beyond anything one ordinarily encounters in discussions amongst supposedly sane people. He affirms his intellectual superiority by screeching "You really should have kept your mouth shut"
- his stylistic genius by starting paragraphs with "Oh my" and "my goodness". and this gentleman claims to be a writer?

Apparently, a successful career in money management has done nothing to shelter his fragile ego. When he tells us that "All the public is extremely aware (sic) of my record of investing in many markets all over the world for many years" (verily, it thinks of nothing else!) and ends his note by inserting a book review from Amazon.com - surely the ante-room to the Noble prize - he goes from the sublime to the grotesque.

His counter-arguments show either an unusual degree of bad faith, extreme ignorance, or some mixture of the two:

1. People are indeed, as you claimed, flowing back to Moscow. Try
booking an inbound ticket on B.A! My mail box is jammed with CV's from investment bankers who are suddenly discovering a "long standing interest in Russia." None of them are from the ex-USSR. We ourselves have recently hired several Russian repats, in one case, winning the person away from a bulge-bracket US investment house. Recent articles on Bloomberg, FT, and WSJ all note that Russia is the flavour of the week in investment banking.this time, for good reason!
2. Rogers here becomes ridiculous. Every single source, BP, IEA,
EIU and the international oil audit agencies all show similar increases in Russian oil production and reserves. Are they all smoking dope? Does this guy know what the entire planet ignores? Presumably, BP did its due diligence before buying TNK. The Western oil majors are fighting each other tooth and nail for stakes in the other Russian oils, I wonder why. His point about why have oil prices not collapsed is equally ridiculous
- perhaps it has something to do with the United States occupation of Iraq proving to be less than a roaring success.perhaps growth in Chinese consumption - up 19% last year - could begin to explain something. Did you ever hear of Venezuela, Mr. Rogers? Accelerating Russian economic growth is, again, obvious for all to see - all, that is, with the intellectual honesty to admit they were wrong. In this context, we all remember the former correspondent of The Economist in Moscow, Edward Lucas; although Ed was certainly no fan of Russia, he did have the good faith to admit that his bearish predictions had simply not been borne out by events. He left as he arrived - a Russia bear, but he showed a fair measure of dignity.

3. Roger's third point has a small grain of truth. The Russian
equity market IS still very narrow. It is not yet use to for capital raising, although it now certainly is used for corp fin purposes, i.e. to buy physical assets. This has not prevented the RTS from being the world's best performing index for the past several years! While the market remains narrow, we are now awaiting the next phase, a wave of IPOs, presumably once domestic interest rates rise above the rate of inflation.
None of this, of course, precludes one's making money. Many of the big hedge funds have been heavily involved, and those I speak with have made out brilliantly! Dividend yields have been increasing while corporate governance IS clearly improving - though from a very low baseline, and not quite as fast as we would have liked.

The Russian debt market is, on the other hand, large, liquid, fast-growing and reasonably transparent. Although markets do occasionally drift a long way from their fundamentals, they invariably correct fairly quickly. Anyone who imagines that the historic crunch in Russian yields over the past 5 years ignores the economic realities (the Rf05 recently traded at a yield of 3.01.that's the RATE, not the
spread!) is either culpably ignorant or simply trying to defend a previous bad call. Again, if Mr. Rogers wishes to short the Russian market, my own firm would be delighted to help!

As we all know, Russia blew a magnificent bubble in 1996-97. History doe not repeat itself - historians repeat themselves.Russian is currently running what is arguably the world's most conservative macroeconomic policy. Reserves are soaring; international debt is being paid down fast, while economic growth is beginning to rival that of China. Huge problems remain.but it is the wilful and arrogant misconceptions of men like Mr. Rogers which makes Russia such an easy place to make money - one simply trades against their ignorance.

Dmitriy, we foreigners are yesterday's news in Russia.the future belongs to the Russians who have gone abroad, learned what was useful in the West, and are now coming home to apply it to the unique Russian context. I sincerely wish you well.

Best wishes,

John Smith (name changed)
Chief Strategist
Brokerage Firm, Moscow

#7

I just read the whole discussion on analystforum (?) and I really fail to understand why people there make such a big deal out of Dmitry CC'ing his class-mates.. As he himself said:

"In the interest of full disclosure, Rogers came to HBS class and made several insulting comments about Russia and Russian people in front of 100 of my classmates backed up by "facts" that had nothing to do with reality."


In Dmitry's eyes, the guy insulted the students' intelligence by providing inaccurate 'facts' and overall bad-mouthed his land of origin AND his people. Since Rogers refuses to argue during his lecture, Dmitry absolutely rightfully takes the discussion offline not forgetting all the people present at the original lecture by CC'ing them.. Whats wrong? Totally reasonable approach if you ask me..

Also, i find Rogers' unintelligible ramblings about forced immigration of population of Soviet republics INTO Russia during soviet years completely laughable, i think he meant it to be the other way around, at least the european portion anyways.
And i don't really understand how anyone can deny the fact that these days people are immigrating into Russia at higher rates than they leave? I think he meant jewish population fleeing Soviet Union during the repressions and all that crap some 40-20 years ago...