(Jimmy) Rogers and Me: The Latest Wisdom From a Global Investing Guru
By William Patalon III
Managing Editor
When Jim Rogers speaks, I listen.
If you have even a passing interest in the art of investing, you’ve no doubt seen investing guru Jim Rogers quoted in a news story, watched the bow-tie-clad Contrarian hold court on CNBC or FOX, or read the books he’s written about his globetrotting adventures, beginning with his bestseller, Investment Biker.
Because of a personal connection I have with Jim (he told me to call him that), whenever I see or hear his name, I always stop right then to see what he’s up to, and to listen to what he thinks.
You would be wise to do the same.
Sure, he’s a self-proclaimed “curmudgeon,” is opinionated, and can be dismissive of theories that don’t hold with his own – but that’s all part of his persona. In truth, he’s a terrific individual, and is one of the brightest investing minds of our time. Even if you disagree with his strategies, and don’t use his ideas, you’ll come out ahead of the game just by listening to what he’s trying to tell us.
And if you do use his ideas and strategies, you’ll come away a lot wealthier, too.
So when I saw that Rogers had spoken at an investor gathering in Singapore this week, you can bet I stopped what I was doing to find out what he’s saying and thinking about the markets right now.
And I decided that part of my role here at Money Morning, should be to share those thoughts – and my personal story – with you.
Let me explain …
The Contrarian Who Could
I was working the Eastman Kodak Co. (NYSE: EK) beat for Gannett Newspapers in the summer of 1997, and found myself in New York City for a Hewlett-Packard Co. (NYSE: HPQ) press conference.
Months earlier, I’d broken the story about H-P’s first foray into the consumer-digital-photography market with its new “Photo Smart” camera and printer system. It was a nifty, low-priced setup that had Kodak’s hugely profitable film and photo processing businesses centered right in H-P’s crosshairs. And H-P was good: innovative, nimble, technologically advanced and gifted at marketing – all the things that the Kodak of that period was not. I’d made all these points in my story, and then flew out to visit H-P out in Silicon Valley. So their marketing folks wanted to make sure I was on the invite list for their slick-and-glitzy “unveiling” news conference in the Big Apple.
My trip to New York had a second purpose, too: My co-author – a successful money manager – and I had recently put the finishing touches on our new book, Contrarian Investing, and we were to meet with publisher Prentice Hall to work out some of the details.
One big issue remained unresolved: We needed a prominent investor – preferably a well-known Contrarian investor – to write the “forward,” the essay that readers perceive as a kind of tacit endorsement of the book.
Though the Prentice Hall folks and my co-author had all tossed around a lot of names, I already knew whom I wanted: Jim Rogers, the high-profile author, columnist, commentator and financial adventurer whose global-market insights were always unique and captivating. I always tuned in when he was a guest on CNBC’s morning “Squawk Box” program, I’d read all his books, and I regularly clipped out and saved the columns he’d written for Worth magazine and other publications.
From Soros to Shanghai
Rogers had earned degrees from Yale and Oxford, done a stint in the U.S. Army, and held several jobs on Wall Street by 1970, when he joined the firm of Arnhold & S. Bleichroeder. That’s where he met George Soros, the guy who today is typically referred to by his full name: ‘Billionare Investor George Soros.’
That same year, Soros and Rogers started The Quantum Fund, a hedge fund that’s often described as the first truly global investment fund. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%. Rogers “retired” in 1980, and since then has traveled the world (several times), written a cart-full of bestsellers, hosted several TV investment programs, and worked as a “guest professor” of finance at Columbia University’s Graduate School of Business.
Since I’d made the suggestion to our friends from Prentice Hall, I was assigned to track Rogers down and ask if he would write the forward for our book. Working from my hotel room during my short stay in New York, I somehow managed to track him down, and we made an appointment to talk by phone.
We hit it off right away.
It helped, I think, that I’d read so much of his work (and was actually able to cite several of his columns by their title, as well as name the magazine they appeared in), that I’d recently returned from an extended reporting trip to China, and that I’d actually invested in one of his emerging markets stock recommendations, a Chinese poultry company that also manufactured motorcycles. He actually gave me quite a bit of time, and we talked about many things besides my book and the needed forward. Even so, it seemed the conversation ended far too soon.
Needless to say, Jim Rogers is a super-busy guy, and gets hundreds of requests – perhaps thousands – but I think he wanted to help out a young journalist and aspiring author, and he agreed to let us to adapt and update one of his essays for use as our forward.
And the one we agreed on couldn’t have been any better had it been specifically written for our book: It was a perfect representation of his view of the world, and it meshed just as well with the message my co-author and I had spent more than a year researching and writing to bring to light.
It’s also the best piece of Contrarian investment advice an investor will ever get. The title of the Rogers essay that appears in our book: “Sell Euphoria, Buy Panic.”
An Investment Guru You Can Bank On
Unlike the “experts” that I’ve sometimes labeled as “celebrinvestors” – whose theories, strategies and recommendations are routinely changed so that they dovetail into the newest “flavor-of-the-month” investment theory – Rogers’ investment philosophy has always been consistent, clear and straightforward.
Overseas shares will beat U.S. stocks for years to come. China will continue to grow into a world superpower, bringing Asia along with it. There will be bumps along the way, but the long-term opportunities remain. And commodities may be the very best investment opportunity individual investors will ever find.
Many of these messages were repeated in Singapore last week, when Rogers spoke at a Nomura investment forum.
For instance, as he told his audience last week, Rogers continues to say that “China is the next great country in the world – whether we like it or not. And a lot of people in the West do not like it that China is the next great country in the world,” citing the work ethic of that country’s emerging consumer class, as well as their propensity to save.
That statement really illustrates why Rogers is one of the great investors of our time.
For one thing, where most investment strategists try to beat the market by recommending a U.S. transportation stock this week, a Canadian telecom stock next week, and a British consumer-staples company the week after that, Rogers looks at broad-based trends – trends that are fueled by powerful, unstoppable, global forces – and then fashions his investment thesis from that analysis. Even if you don’t want to act on his insights, you’ll learn an awful lot about what’s happening beyond the U.S. borders just by listening to his consistent, eloquent mantras.
A second point, which his comment about China makes completely clear, is that Rogers doesn’t care what others think of his analyses. He’s not going to sugar coat his views, or otherwise alter them just because “a lot of people … do not like it.”
Frankly, he doesn’t care. He sees his role as one of informing and teaching us often-dullard Americans that the axis the world spins on doesn’t go through Wall Street anymore.
Indeed, Rogers has a new book coming out that targets this point in a most-specific way. The book, A Bull in China: Investing Profitably in the World’s Greatest Market, is due out in the first part of December.
I can personally vouch for the fact that Rogers has been predicting this China boom (I use that term broadly to include Asia and the world’s other emerging economies) since 1990, when he and his girlfriend of the time circumnavigated the globe via motorcycle, a trip that spawned Investment Biker. That’s about the time I started following Rogers’ work, including his big-picture essays that ran in top investment magazines.
Some of those essays detailed the impact all this growth would have on commodities, which is one reason that Rogers has been a longtime commodities bull. The profit opportunities from the commodities markets will far outstrip the money that can be made in stocks and bonds, and isn’t a playground that’s restricted to the institutional investors and investment bankers of Wall Street; Rogers believes individual investors can profit from commodities, too – very much a Contrarian stance.
Rogers has certainly called the commodities boom perfectly. The thing is – and I’m not taking anything away from Rogers, for he’s a brilliant guy – soaring prices for oil, metals and other commodities is a logical result of the explosive growth in China and Asia and was there for anyone to predict and to see. But it’s the systematic way in which Rogers analyzes investment opportunities – and his ability to see the linkages and relationships between different markets and different asset classes – that sets him apart from most other investment “experts.”
We here at Money Morning approach our role in much the same way. We know that most global growth in the years to come will be outside the U.S. borders, and that those who embrace this reality and invest accordingly will amass real wealth. Those who refuse to accept this new global reality will end up facing some very lean times. So we follow worldwide money-flow trends of all types, analyze the effects we expect those capital flows to have, and then use those insights to bring you the best long-term profit opportunities that we’ve discovered.
During his speech in Singapore last week, Rogers said he thinks the shares of China-based companies are overvalued, especially since the Shanghai Composite Index is up more than 35% since the start of the year – and has actually been up by as much as 62%. While Rogers says that he isn’t selling his China holdings right now, he also says he wouldn’t add to his positions right now.
But Rogers said that if China’s stock market fell by 40% or even 50%, “I would increase my position in a big way,” because the long-term growth prospects are so solid for that part of the world.
Rogers did discuss one of the substantive moves he’s making to his investments. He told listeners that he was selling stock in Wall Street banks because he believes the housing slump will continue. And he suggests that investors buy into sugar as a way to enter the commodities arena, noting that agriculture is a very promising sector for investors considering new commodities investments.
“Financial companies, stockbrokers, investment banks … I am short. I am short financial-services companies, mainly in America. I am short [U.S. mortgage-market-maker] Fannie Mae (NYSE: FNM),” Rogers told journalists in an interview that followed his address to investors.
During that same interview, Rogers also said that, in his opinion, the U.S. financial sector offered the best opportunities for profit by investors who want to sell stocks short. That’s because there’s always a price to pay for Wall Street’s excesses and because “the problems with the housing market have a long way to go in the United States. Probably more so than in any other country. But the excesses in the world economy are on Wall Street – investment bankers. Those guys are making vast fortunes [and] that’s not the way the world works.”
