The first time I met a Gypsy was in high school, when a member of that tribe defrauded me in a car repair contract; other than being unhappy, I didn't think anything of it at the time. Dishonest people come in all races, colors, and creeds.

The second time was in 1966, when I spent a few days with a Hungarian family on my way to Romania.

The Hungarians were appalled I was leaving their fair land for "a gypsy country,” where they insisted I would be robbed and generally abused; it was my first introduction to how most Europeans feel about the Gypsies.

I actually met a few Gypsies in Romania back then and, contrary to the fears the Hungarians (who liked to characterize all Romanians as Gypsies) tried to instill in me, they seemed romantically appealing, rather like the ones in Bizet's opera "Carmen,” I hadn't given the group any further thought until returning to Romania in May.

You might be surprised to know that out in the country (where most of them live) Gypsies can still be found driving their peculiar wagons around behind a couple of horses and camping by the roadside; it surprised me, in any event. Very quaint in the year 2000, but it left me asking myself how these people supported themselves. And it was easy to see how local farmers would have reason to suspect them if a chicken or some crops went missing.

In Bucharest I encountered Gypsies on three separate occasions, when two children and a young woman literally attached themselves to me to beg.

Some say the Gypsies are marginalized because people discriminate against them and they discriminate against them just because they're Gypsies. There's a lot of truth to that, and it makes things harder for many individuals. The problem, however, is that certain groups inculcate certain values in their members and when you deal with a member of that group you have to make certain assumptions, or else be taken for an idiot. For example, even where abortion is legal, a rational person who wants one wouldn't approach a staunchly Catholic doctor. When you see some young punk with a shaved head, tattoos, sporting heavy boots and chains you shouldn't expect him to be an NAACP member.

Different groups have very different, and often very strong, corporate cultures, and those cultures define their membership much more than race, language, or religion-- although those things are often essential elements to the culture. Many groups are very "exclusive,” in the sense they overtly keep outsiders as outsiders. The problem is that often tends to make the outsiders resent them. Outlaw bikers, Orthodox Jews, Black Separatists, Nazis, Knights of Malta, Gypsies, Marine Corps vets, Seventh Day Adventists, Overseas Chinese, English football hooligans, Greek restaurateurs, and Russian Mafiosi are just a few random groups that tend to be in little worlds of their own.

The fact is that people generally like to associate with others like themselves, based on whatever is important to them; some groups just take that to extremes. My own belief is that you can expect thousands and thousands of groupings like these, based on every possible combination of interests, beliefs, and characteristics, to become ever more prominent in the future. Especially as the nation-state breaks down, people will realign in ways that are more beneficial and rational. The Internet will help them find each other.

I wouldn't say the Gypsies are the most edifying example of what's evolving, since they're not really prosperous, and have a lot of what most non-Roma consider bad habits. But their social structure is so old it's on the verge of becoming the wave of the future.

But there's no direct way any of that is going to make you richer. The following might, if you're adventurous. And a couple of Romanian gold stocks are even better near-term bets.

Long-time readers know that I always go out of my way to visit the local stock exchange, if one exists, in countries that few Americans even know exist. Bucharest offered me perhaps the biggest surprise of my career. I read a brief article in an English language paper (Romania has several) discussing the market, and it noted that the Bucharest Exchange had about 130 companies listed. Fine. Then it went on to discuss the OTC market, called the RASDAQ, saying there were over 6,000. I felt certain it was a misprint, off by at least one, maybe two zeroes. But an afternoon at the exchange with some brokers proved it was an accurate number and each of the companies even has its own four letter symbol.

Further, the number of companies is going up, as another 400 firms are privatized this year (including the national airline) and an estimated 700 next (including the national oil company). Many will be sold wholesale to foreign buyers; some will be listed on some basis. As you might expect, BSE companies show earnings, are larger, and usually pay dividends.

The BSE has a market cap of about US$375 million, with a typical weekly trading volume of $500,000; the RASDAQ has a cap of about US$975 billion, with weekly volume of about $1.3 million. What this means is that in a typical week most stocks don't trade, especially on the RASDAQ. And the typical trade is for only a few hundred dollars.

What do all these companies do, and what are they worth, and who owns them? To investigate the businesses, income statements, and balance sheets of that many companies—even in the most cursory way—would take years, even if you had a staff and made it a full-time job. My guess is that many of them are selling at a tiny fraction of what they could be liquidated for, assuming management was clever (or ethical) enough to do that.

As to who owns them, it's almost exclusively Romanians. With no liquidity in the market, it's out of the question for foreign institutions, or even many individuals. And with elections coming up this November, the occasional violent political demonstration (although none while I was there) and worries about Communist sympathizers getting back in office, there's no rush to buy Romanian stocks. Especially with most world markets headed down.

If I had a son or grandson who was anxious to make a lot of money, however, I'd pack him off to Bucharest with instructions to learn what it means to be a venture capitalist, a white knight, a greenmailer, a takeover artist and such. The bankroll involved would be peanuts and the upside huge.

What am I going to do? I'll probably open an account with the broker I interviewed and put maybe $5000 in each of four or five stocks, some of which have current yields in the 50% range, just to get my feet wet and have an excuse to watch the market. Notwithstanding my bearish view on stocks in general, the eventual integration of Romania into the EC will normalize values here. And with the typical P/E on the BSE around 3-1 (90% of the companies have P/E's between 1.5 and 6 to one), I figure it's a superb punt.

I'm not going to follow Romanian stocks in this letter, because IS is arcane enough as it is. It just wouldn't be practical and gold mining stocks will provide all the volatility anyone needs for the next few years. But if you have plans on going to Europe this summer, it's a good extra reason to see Romania.

Property

If anything, property is a better buy than stocks. Bucharest is very cheap by most standards; I'll guess about 25% of Western European levels for equivalent buildings. But that's not what got my attention. The fact is that the country probably has the best farmland in Europe-- flat, deep, rich topsoil in the Danube basin, combined with a fairly mild climate. Those of you in the farming business may be shocked to know the finest farmland in the country—which is to say some of the best in Europe and the world—can be had for US$250-300 a hectare, or US$100-120 an acre, or about 5% or less of what it would be in North America. There are two reasons for that I can figure. It's mostly in small, hence uneconomic, holdings of peasant farmers and there is not enough domestic capital to make it productive.  I think it's a great speculation.

Scenic land in the mountains of Transylvania is available for US$50 per hectare, or $20 an acre, and is also a superb speculation. Other than that, it seems to me there are two parts of the country that are worth looking at. One is around Timisoara, the university town where the 1989 revolution began which, since it's on the Western border, is the most culturally westernized, and most likely to benefit first from Western investment. The other place to look is Romania's Black Sea Gold Coast, where a 100 room hotel with 10 ha of land can be had for $1 million.

How secure are these investments? In my view they’re quite secure. Nationalization is a dead duck the world over. Especially in countries that have been through the meatgrinder of socialism for a few years, there's usually a special reluctance not to make the same mistakes again—at least so soon. And that's usually compounded by a desperate need of foreign capital, further insuring straight dealings. In any event, title is kept in a central registry, where any claims or debt are recorded. And, as with Romanian stocks, there are no restrictions on property purchases by foreigners.

Some Miscellaneous Opportunities

Oddly, even though you can buy stocks and property freely, there are restrictions on the export of large crystals and old furniture (and probably any number of other things), in the ridiculous view that they're national treasures that should stay at home. What that's done is depress the prices of these things, creating an excellent, but very small scale, speculative arbitrage opportunity. I purchased six fairly large (say eight inches on a side) crystals of various types for a total of about US$300, less than 1/10th of what they're worth in the States. Of course they're still in Romania with a friend, but that doesn't bother me; the restriction on them will necessarily vanish by the time the country readies for EC entry. And since superb mineral specimens (advice: always buy the biggest and best you can afford) will continue to appreciate rapidly as a form of artwork, the things will be worth even more then.

The same is true of fine old furniture. Romania is awash with the stuff, and you can buy it more cheaply than the veneer-covered pressed fiber junk that's so popular in the States.

The other thing of interest was old stock and bond certificates. Romania had an active securities market right through WW2. I especially like the old bonds, where the coupons stopped being clipped in 1948, after the Communists took over. Of course it wasn't worth clipping them by then anyway, in that the Lei was being inflated at about 10,000% annually by the end of 1945. Old bonds are excellent reminders of what eventually happens to most currencies and most debt in the long run. I bought a stack of excellent specimens, suitable for framing, as they say, for about $1 each. Sad to say, each of them may well have represented someone's life savings.

Romania, with brief intervals of respite, has been a hard luck story for most of its history. Unlike a lot of other countries of which that's true, I have a good feeling about the place. But most investors give the country a discount, mainly because they're unfamiliar with it. And, insofar as they are familiar with it, they've heard mostly dated and unfavorable things. That's fine. It's why the opportunity exists.