Jim Rogers: U.S. stocks have yet to hit bottom

By Herbert Lash

NEW YORK (Reuters) - Jim Rogers, the investor who had co-founded the Quantum Fund with George Soros, on Tuesday said U.S. stocks have yet to hit their bottom in this bear market, saying there could be no lasting rally until the economy recovers.

Rogers said he is unsure where to invest, although he likely will sell the U.S. dollar -- which he called "terribly flawed" -- and buy commodities. He was one of the earliest investors to predict the boom in commodities in recent years,

He told Reuters that efforts to pull the economy out of a steep downturn will not drive a lasting recovery because the government is propping up failing businesses and not allowing them to go bankrupt.

"None of which does much for the economy down the road. It's trying to postpone some pain we're going to have to take," he said in an interview from Singapore, where he lives.

Rogers said Japan tried fiscal stimulus to no avail, while countries that bit the bullet --such as Mexico after the peso crisis and Sweden after its bank crisis, both in the 1990s -- bounced back and did not prolong an economic morass.

U.S. stocks may rally because of the enormous amount of money the government is pumping into the U.S. economy, but "it's not going to last," Rogers said.

"I don't think the bottom is here, maybe 'a' bottom, but not 'the' bottom. The economy is going to get worse. You can't have a good stock market without a good economy," he said.

Rogers, who has railed at U.S. government efforts to stabilize the financial sector, said there will be a currency crisis in 2009 or 2010 that will "cause all sorts of turmoil and opportunities and losses."

"I want to get out of the U.S. dollar sometime this year, at least I plan to, because it's a terribly flawed currency," he said.

Meanwhile, Rogers is pondering his next investment decision.

"I don't know where I'm going to wind up putting my money. But at the moment I'm doing nothing but watching," he said. "I may just have to wind up putting it all in commodities because commodities are the only thing (whose) fundamentals are being enhanced."

Rogers rose to fame after co-founding the now-closed Quantum Fund in 1970. The fund returned 4,200 percent over that decade, compared with a 50 percent gain in the S&P 500 index.

(Editing by Leslie Adler)