Enron, Teapot Dome, Penn Central, Washington Public Power, the Vatican Bank, BRE-X -- the history of the financial world is littered with train wrecks, and the latest is Refco.
    I often wrote that the Rogers Raw Materials Fund was one of my favorite ways to profit from the falling dollar. The most recent mention was in the July 2005 EWR, when I said the fund had a three-year profit potential of 200%, and a risk level of 2.25.
    Unfortunately, the risk-level part of that forecast turned out to be the most relevant part. The Rogers fund had much of its money in Refco - one of the largest futures brokers in the world - and when Refco went down, the Rogers money went with it.
    Evidence is still being sifted, and probably will be for years.
    At this time, in my opinion, it's likely more than one person will be going to prison, but this won't help you recover your money.
    Some kind of settlement or bailout is possible, but I give it no more than a 10% probability. I think the most realistic attitude to take is, the money is gone.
    This does not mean anyone associated with the Rogers fund is incompetent or crooked, nor does it mean the fund was a bad idea. On the contrary, I see no reason to change my mind that the Rogers fund was - still is - a great idea, and well run. It was doing what it was supposed to do, the profits were impressive.
    But, if you still have money in the fund, and are nervous about it, then by all means, you should take it out. Never do anything that makes you uncomfortable.
    On the other hand, as nearly as I can tell, the fund's theory and execution remain sound, so if you leave the money in the Rogers Fund, maybe you will eventually earn back what you lost.
    But, of course, no guarantees. Early Warning Report is one of the few newsletters that talks about risk, and the Refco scandal is an example of why we do it. Even the best laid plans can be wrecked by a bolt from the blue. •