Investment prospects of war-torn countries

Tom Dyson - Tue 11 Apr, 2006

...DR Congo is the wettest country in the world. Anything will grow, including cash crops like coffee, rubber and cocoa...When I hear war stories like this, Im reminded of what one of the best investors of our time, Jim Rogers, has to say about the investment prospects of war-torn countries...

Investment prospects of war-torn countries

One of the bloodiest wars in history has just ended.

This war, which officially ended in 2002, was the
world's deadliest since the Second World War. Four
million people were killed. For perspective, 300,000
died in the Balkans as Yugoslavia split up. In the
second Gulf war, still in progress, the body count is
less than 30,000.

Nine nations were directly involved in the fighting, as
well as over twenty distinct armed groups, which make
it the widest interstate war in this continent's history.

They call it the African World War, and it took place
in the Democratic Republic of Congo (DR Congo),
formerly known as Zaire or the Belgian Congo.

The DR Congo is the size of Texas, California and
Alaska combined. It's loaded with minerals, including
large deposits of copper, diamonds, tin, silver,
and gold.

Investment prospects of war-torn countries: DR Congo

But here’s the fact I really like:

DR Congo is the wettest country in the world. Anything
will grow, including cash crops like coffee, rubber
and cocoa.

The DR Congo used to be one of the richest countries in
Africa, but its vast resources were a curse – they were
the only things worth fighting for - and now it’s one
of the world's poorest.

The first Congo war started in 1996 as a way to grab
power from the long-time dictator Mobutu Sese Seko.
Mobutu had held power since 1971. His regime gave new
meaning to instability and corruption. After two years
of fighting, Mobutu escaped into exile and died soon
afterwards.

Rebel leader Laurent Kabila assumed power.

The second Congo war started in 1998 as Kabila took on
the forces of Rwanda and Uganda, among others. In
January 2001, Laurent Kabila was assassinated and his
son Joseph took power.

The conflict contained some of the most horrific war
crimes ever witnessed, including genocide, tactical
spread of disease and mass amputations.

Thankfully, this bloody war is now over and the Congo
may bloom once again...

In 2002, the different factions signed a comprehensive
ceasefire. Four years later, the Democratic Republic of
Congo is about to have its first democratically elected
government since 1961. Elections are set for June 18th.

Investment prospects of war-torn countries: Renewed
activity

The CIA World Factbook says, “In 2005, renewed activity
in the mining sector, the source of most exports,
boosted Kinshasa's [the capital] fiscal position and
GDP growth. Business and economic prospects are
expected to improve once a new government is installed
after elections.”

Right now, there are 18,000 UN troops stationed in the
DR Congo. Ten days ago, Kofi Annan, head of the UN,
visited Congo to meet with the president.

When I hear war stories like this, I’m reminded of what
one of the best investors of our time, Jim Rogers, has
to say about the investment prospects of war-torn
countries:

“As an investor, I wait until the wars are fought, the
borders are redrawn and the newly elected governments
are eager to make something of the country's resources.”

I pay attention to Rogers because he’s made a career by
finding the right time to invest in foreign countries.
As he’s pointed out many times, the end of a war is a
great buy signal. It’s a great time to buy assets and
raw materials cheaply.

The DR Congo has hit rock bottom, and it could soon be
time to get in. Now we need to find the right investment...

Good investing,
Tom Dyson

*** Tom Dyson is a member of the True Wealth research
team. There's not another financial writer with a more
proven contrarian view. Tom made his first trade age
12. The stock returned 300% in less than 9 months.
Since then, Tom has worked on a bond trading desk at
Salomon brothers, qualified to the Chartered Institute
of Management Accountants and ridden freight trains all
over North America.

In his spare time, Tom likes to speculate in the
capital markets, gamble on the golf course and play
poker against his colleagues. He graduated from the
University of Nottingham with a degree in Spanish.
Tom's articles have appeared in the Daily Reckoning and
many other well-known contrarian websites.

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