(From today's Barron's - Randall Forsyth, "What Zimbabwe Can Teach America About Asset Values")
WHERE WAS THE BEST PLACE to invest in 2007? If you had picked emerging markets a year ago, you'd have been rewarded with a 33.55% return, by Morgan Stanley Capital International Indices' reckoning. And if you were keeping score in dollars, which after all is what really counts to most Barron's Online readers, you netted 39.78%. (Thanks to Bianco Research for gathering these data.) But that paled next to 2007's top bourse: The Zimbabwe Stock Exchange, which gained 322,111%. Jot that down if you're looking to win a bar bet. Yet that gain is far less spectacular than it seems. Inflation was estimated by the Reserve Bank of Zimbabwe at 24,059% last year, so the real gains in stock prices were far less than the nominal numbers indicate. And that inflation estimate is just that. With goods disappearing from store shelves in the hyperinflation, Zimbabwe's Central Statistical Office stopped provided inflation data in September because it had no prices to go on. Independent economists estimate inflation is running at 50,000% to 100,000%, according to local press reports. That would compare with the 32,400% inflation rate in Weinmar Germany in 1923.
