Jim Rogers on commodities, currencies - and crops

(2010-10-19 01:44:52) 下一個
Mon, Jan 19, 2009

By Chew Hui Min

"If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia," investor Jim Rogers was once quoted as saying.

Voting with his feet, he did exactly that in 2007 when he moved to Singapore, where his two daughters can learn Mandarin.

When he spoke at the Global Forum on Intellectual Property (GFIP) on Jan 9, he was bullish about commodities and Chinese stocks, and pessimistic about the US dollar and US economic policies.

After the conference, he told AsiaOne what he was investing in and explained why savvy investors might want to start looking for farmland to buy.

Q: What are the commodities that you're buying?

A: I only buy indexes because my lawyer won't let me buy individual commodities. I write books about them, I talk about them all the time. If I say "you buy cotton" - and I own cotton - and it goes down, I'm going to get sued.

What I bought most recently is agriculture index and general (commodities) index.

Q: Do you see opportunities in alternative energy?

A: There are probably spectacular opportunities in wind power, in nuclear power and solar power and things of that sort if you can find the right entrepreneurs.

The problem is, everybody in the world knows that and thousands of people are racing in there - and you remember dotcoms.

Dotcoms had a fantastic future in 1996 and thousands of people went into it. Most of them turned out to be failures because you had too many people chasing the same things.

Q: How would you recommend a lay person invest in commodities?

A: No one should invest in anything unless they know a lot about what they're doing. It's better to put your money in the bank at very low rates of interest than to invest in things you don't know and lose money.

But if you decide that you want to invest in commodities, the study shows that the best way for most investors is to invest in an index.

Index investing has been proven repeatedly for decades to outperform active management, so most amateur investors should invest in an index fund.

Q: If I ask you to invest $10,000, what would you do?

A: I would go to the beach and I'd ask you to go with me. (laughs)

I've told you what I'm doing - I'm buying commodities, I'm buying Chinese shares. I would learn about selling short and I would learn about currencies, because some of the best opportunities in the next year or two or three are going to be in the currency market.

There may well be a currency crisis centred on the US dollar and, if there is a currency crisis, most stocks will go down.

Q: Why are you so down on the US dollar?

A: I don't like being down on the US dollar, but US is a horrible creditor nation, it's running up gigantic debts.

The United States government itself has tripled its own national debt in the last six months, the Central Bank in America has tripled the obligations on its balance sheet and has taken a lot of garbage, and they're printing a lot of money.

Throughout history, this has always led to a decline in the debasement of your currency. They actually want to debase their currency - that's their conscious policy.

But, even if it weren't their conscious policy, it has never failed to cause problems in the currency market and unless the world has changed somehow in the past 5,000 years, or the Americans are different - which I don't think at all - this is going to lead to problems with the dollar and the currency markets.

Q: Is yen the only currency you are buying?

A: Right now, because the yen is subject to the carry trade and has been beaten down unnaturally, so in my view the carry trade* will reverse and that's where the best opportunities are.

Once the yen goes up a lot - if it goes up a lot, like I think it will - then I will have to figure out what to do, as the Japanese have a serious fundamental problem down the road and unless they do something, I don't want to have anything to do with Japan in ten years.

*where a speculator borrows funds at a low rate and invests these funds into higher yielding assets

Q: Which other currencies would you invest in?

A: I don't know what I'm going to do when I stop buying the yen. I own the Singapore dollar, I own Canadian dollar, but if you look around the world, it's very very hard to find a sound paper currency these days.

Singapore philosophically is the strongest currency in the world. The problem with Singapore is, if everybody in the world debases their currency, we can't sit here with the only strong currency in the world, because we're not competitive, it puts us out of business.

I own renminbi. In theory, it's going to be a great currency down the road but even right now, the Chinese are trying to hold their currency down for a variety of reasons.

Q: Besides China, are there other Asian markets that you would invest in?

A: No, I was interested in Taiwan because of the peace, but it's such a regulatory nightmare to invest in Taiwan that I've sold my Taiwan shares.

And South Korea, I was interested too, but these countries they still regulate insanely the free flow of capital. Both of them want to become financial centres, but it's a bit ludicrous to think that you can be financial centres if people can't move their money in and out freely.

So while there may be possibilities, I've given up on Taiwan and South Korea.

Q: How about Singapore?

A: I've moved to Singapore, my biggest investment is obviously Singapore, my personal investment - we live here, we're permanent residents, my daughter goes to school here.

But we're not buying property here, not yet - we're not buying property anywhere in the world. I certainly own Singapore dollars, and here I am!

I can't make a bigger investment than to move to a country. We looked at all the countries in the world and we decided the one we wanted to live in the most was Singapore for a variety of reasons. We voted with our feet.

Q: Are you willing to buy a house here?

A: Right now, we're renting. If we found the perfect place in the perfect location... we do not know yet where we want to wind up.

We've looked at a lot of houses, we're learning more about Singapore. Right now, we have to live within one kilometre of Nanyang Primary, so that our daughter can go to that school.

If and when we find the perfect house, we'll probably buy it. If you know of the perfect house, please let us know.

But, I don't think this is a great time to be buying property in much of the world. It's a great time to stay away from property, unless you're going to buy farmland, timberland or if you can find some land near some mines. Or buy yourself a lake house where there are a lot of farmers, it'll probably be ok.

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