Guerrilla's Siris sees end of American era

By Jennifer Coogan

NEW YORK (Reuters) - High levels of debt, the war in Iraq and shifting demographics will bring about "the end of the American era," a hedge fund manager said on Tuesday.

Peter Siris, who runs U.S. hedge fund Guerrilla Capital Management and Hua-Mei 21st Century, a fund specializing in emerging Chinese companies, said young Americans should study Chinese because fading U.S. influence in the world will require them to invest more money in foreign firms, especially in the Far East.

"I'd like to come in and be bullish about the United States, but I'm not," Siris told said the Reuters Investment Outlook 2007 Summit.

Investment opportunities abound in China because there are still many inefficiencies in the Chinese markets to exploit, Siris said, but warned that U.S. investors should be prepared to do their research.

"I think it's an area for a lot of fraud," Siris said. "A lot of these people coming over and selling these stocks to investors have really not done their due diligence and do not care to do their due diligence."

He said the U.S. housing market slowdown is not yet finished and will likely deteriorate further as baby-boomers look to down-size.

"I'm not very bullish about who is going to buy all those houses in East Hampton, all those extra ski houses in Vail. The housing industry will get hit, and a lot of the baby boomers' net worth is in housing," Siris said. "Consumers will feel poor."

Siris said the war in Iraq will likely impact the United States detrimentally for the next 50 years.

Along with fading geopolitical influence, he said the U.S. economy will be challenged by a continuing trend of outsourcing as information-based services are even easier to export across borders than manufactured goods.

On the near-term horizon, Siris was optimistic about the U.S. political outlook.

"We're in the best of all world's politically. We have checks and balances in Congress. The next two years are going to be politically constructive years and people will look to 2008 and make a lot of compromises."