It was no secret. On November 29, speaking to some 200 members of the Dallas Society of Investment Analysts in the Malachite Room of the Hotel Kempinski, Jim Rogers was blunt.

"I'm short Mexico.", he said.

The idea was not in good standing with the Conventional Wisdom at the time. But that didn't make Mr. Rogers nervous or even remotely unsure.   Now a private investor who teaches at Columbia and comments on CNN, Mr. Rogers made his fortune as a partner with George Soros running the legendary Quantum Fund, a hedge fund that took long and short positions around the world.

Fascinated with maps and boundaries, a recurrent theme in his book "Investment Biker", Mr. Rogers paints the world with a broad conceptual brush and invests the same way. Here is what he told me, in a recent telephone interview, about how he decided to short Mexico:

"It started with a historic analysis. The Mexicans have devalued after every election. It's a recurring theme. I could see they were printing and spending an incredible amount of money.

"I couldn't find anyone (in Mexico) who said inflation was the 7 percent the government said it was. No one believed it except the mutual fund managers. The real rate was a lot higher.

"There had to be trouble. (When they privatized), they sold the banks at such high prices, the bankers had to make loans that would pay for the banks.

"The Peso started getting weak. Foreigners said they wouldn't buy anymore. Promised returns had brought a lot of hot money in. That money could leave just as quickly. Mexico still had a deficit.

"You put that together with the election and I didn't see how they could fail to devalue. The only difference ( with devaluations in the past) is that the outgoing President didn't want to devalue as most had... He didn't want to go through the devaluation or admit responsibility."

So Jim Rogers was short Mexico. The operative word here is "was."

What is he doing now?

Neutral and waiting.

"I covered my shorts.   On a devaluation you usually cover and go long. This time I haven't gone long because the Americans have rushed in with support. Too many mutual fund managers... and others... must have put a lot of pressure on. The Bolsa may very well rally because the U.S. government is throwing $40 billion at it."

( One consistent bet on Mexico came from Fidelity Investments, the largest of the mutual fund companies. A year ago, Fidelity Investments managing director Robert Pozen visited newspapers around the country to drum up support for NAFTA. Mexico, at that time, was the investment giants' single largest investment outside the United States. In addition to Mexican stocks held in a variety of funds, asset allocation funds like the $12 billion Fidelity Asset Manager had large positions in Mexican Brady bonds, a position that contributed heavily to the 6.6 percent loss the fund suffered in 1994, dropping it from its accustomed position as one of the very top asset allocation funds to the 85 percentile, meaning that 85 percent of all asset allocation funds did better.)

What concerns Rogers is that the proposed U.S. bailout will only mask enduring problems in the Mexican economy. While it is easy to make a case that Mexico will be a much more competitive exporter after the devaluation, that's not what the past record suggests: the Montreal based "Emerging Market Analyst" advised subscribers to be short Mexico in November because years of sustained foreign investment had failed to produce the rising exports that would have offset rising Mexican imports.  

The market, in recent days trading, also appears to reflect second thoughts about the proposed U.S. bailout. After falling nearly 20 percent from early December, the Bolsa index appeared to bottom at 1972 on Tuesday, January 10th. It rose slightly on Wednesday and surged after Friday the 13th when a U.S. Treasury financed bailout for up to $40 billion was announced. The Bolsa index peaked at 2,243 on Monday, January 16th and has continued to drop since. It fell Friday and continued to decline yesterday as worries about the bailout increased. The Bolsa index closed yesterday at (check #).

One consequence is that the three closed end funds that invest in Mexico have fallen in price but are now selling at substantial PREMIUMS to net asset value per share. Indeed, the premiums over net asset value per share have actually increased in the last week for Mexico Equity and Income and Emerging Mexico as share prices on the Bolsa continued to plunge.   Here are the figures:

chart