Monday, January 29, 2007

Investment Strategies in Global Market - Jim Rogers -1 of 4

1. Just as U.K. was the strongest economy in the 19th century and the U.S. in the 20th century, China will be the strongest economy in the 21st century.

2. The Chinese are the ‘best capitalists’ in the world. They invest over 40% of their income. In contrast U.S. invests less than 2% of their income. In fact today there is negative savings in the U.S.

3. Even though China is a growing economy there will be setbacks.

4. Jim Rogers sees problems in real estate at the end of the year in China.

5. The biggest development possible is the interaction of China and India and their becoming friends. This will create Asia into a powerhouse.

6. Jim Rogers has a daughter, 2 years old, who has a nanny who teaches her the Chinese language. If one wants to succeed in the 21st century one will have to learn the Chinese language.

7. The U.S. dollar was the reserve currency for 60 years. Today the dollar is depreciating against other currencies. The U.S. economy is slowing down. It is the largest debtor nation in the world. The debt today stands at 8 trillion dollars. The increase in debt is taking place at the rate of 1 trillion dollars every 15 months.

8. In the 80s and 90s there was a great market for bonds. It peaked in 2003. Now it is in decline on account of a rising interest rates scenario. For the next 15 years bonds is not the place to be in. Stocks are extremely expensive in the West. In India too the valuations are a concern and the Sensex would also operate in a trading range.

9. Today one needs to be in the commodities market. That’s the place to be for the next 10-15years.

10. India is just developing. 25 years ago people didn’t understand what mutual funds were. Today everyone is buying stocks and mutual funds.

11. Worldwide there are over 70,000 mutual funds for shares whereas there are fewer than 10 for commodities.

12. Historical analysis has shown that there is an inverse relationship between stocks and commodities. When stocks do badly then commodities do well and vice versa.

13. The shortest bull run for commodities lasted for 15 years while the longest lasted for 23 years. The average bull phase would therefore be about 19years.

14. The whole analysis revolves around demand and supply. There has been no gigantic oil field discovered in the last 35years. The last lead mine was discovered around 25years ago. Current exporters like Malaysia and Indonesia and other exporting nations will soon start importing oil. Oil fields and mines will deplete. When the supply is affected and the demand in commodities will rise then this will lead to a bull phase in the commodities market. Those who have raw materials and other natural resources and can manage them well will own the future world.

15. The Saudi oil reserves were estimated in 1979 to be about 245 bn. barrels. From 1988 till today the Saudi government has consistently quoted the oil reserves figure at 260 bn. barrels. It’s always the same even though one knows that since 1979 63 bn. Barrels have been consumed per annum. Every oil producing country is experiencing depletion of oil reserves. So there’s something wrong in reporting the figure of 260 bn. barrels of reserves as constant.

16. As commodity prices go up, bonds become less attractive. It takes a long time to bring in the extra capacity for commodities. For instance it takes a long time to discover oil reserves or a lead mine. But once discovered then the capacity lasts for a long time.

17. In all major developed countries stocks are not doing well since 1999. Maybe there are extraordinary conditions in India but Jim Rogers will not purchase stocks in India. He is more bullish on commodities. He owns gold but he is more bullish on other commodities. For instance agricultural commodities like sugar which has tripled in the last 3 years but is still 80% less than its all time high. Jim is also bullish on coffee and cotton. The best opportunities are in agricultural products like wheat, maize, soya etc.

18. There is more money to be earned in commodities themselves rather than in commodity stocks ie. Companies involved in commodities. For instance natural gas has tripled in the last 3 years whereas Enron which was in natural gas went bankrupt.

19. There are no stable currencies today. The Canadian dollar is strong. Canada has had a balanced budget for the last 8 years and is rich in natural resources. Jim doesn’t expect the Euro to last beyond 15 years. The Singapore dollar is very reliable today. The Australian and New Zealand economies are natural resource based and are sound. Though it is difficult to believe but Jim feels that Brazil will do better than many countries in the future since it has large natural resources.

20. When dealing with a broker it is better to have segregated accounts. One is also less likely to lose in the commodity market because the commodity brokers have to put up the money the same day while the stock broker has 3 days.

Pls Note : Above mentioned suggestions are totally the views of the respective Guru / Author and it does not guarantee any success / failure. Please invest by thinking through all the options available in the market and the decision should be purely yours. The Guru / Author does not expect / want / require any share of your Success / Failure.


Lisa Moore said...

I also learn Chinese language by a special and innovative service in Beijing Chinese School. I like to learn in live class with teachers from Beijing directly. I also like to practice Chinese with volunteers freely everyday. Watching Chinese learning TV on CLTV is also interesting and helpful to practice listening and learn more about Chinese culture.

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