Saturday, February 24, 2007

Investment Strategies in Global Market - Jim Rogers - 3 of 4

41. All assets increase. Central banks become too loose with cash. Sometimes it is better to keep cash. Cash is one thing which nobody wants. It will appreciate.

42. The dollar is really going to go down. Jim’s 2 year old daughter does not have a dollar account. She has a Swiss account.

43. If an unforeseen event like bird flu takes place then everything will be affected. It can even throw the world into recession depending on the number of persons affected.

44. If there is peace between China and Taiwan then invest in Taiwan. Asian banks hold dollar reserves inspite of its decline. This is because of a bureaucratic mind. South Korea is changing. It is not supporting the dollar.

45. The U.S. government, nation, consumer is over-extended. The best engine of growth is savings and investment and not consumption. Consumption is not sound growth.

46. The U.S. will have a recession this year or next year. This will affect Asia but Asia is doing incredibly well. Asia would continue to grow but the effect of US recession will reduce the pace of growth.

47. In China and India if everyone has a scooter then there will be a demand for lead batteries. But no lead mine has been discovered. And nobody has discovered a substitute.

48. It is a lot easier to analyse and understand commodities than stocks because stocks have a lot of external influences which need to be looked at like the government’s policy and the central bank’s pronouncements etc.

49. If politicians mean what they say, India can have a bull run for the next 15 years.

50. Most mergers and acquisitions are not good except for Wall Street. As a share holder one needs to hold the shares for a short while till the shares appreciate because of the merger and then sell. Or if one is an investor get the cash and don’t invest in the surviving company.

51. When managements get exuberant then mergers take place. Avoid the need for diversification which could lead to buying companies in industries which the current management knows little about. Most mergers don’t work. There is a clash of cultures, managements and different styles.

52. One needs to get involved in companies with better margins. Another area to look at is capital expenditure, advertising and R&D. One needs to know the trend in the expenditures in these areas which gives one an idea whether the company is being stripped or dressed up or being invested in for growth. Most mergers don’t add value. Also when buying look at interim earnings and debt maturities.

53. Today in India only 2% of savings are going into the stock market, P/E is just 17. So Indians are still to invest and the P/E can still go higher. P/E of 6 is nearing the bottom while a P/E of 26 is nearing the top.

54. Tourism in India is going to be big. The Chinese have started to travel. UK and Europe are realizing this and promoting their countries to them. However, the Chinese will come a lot to India because it is nearer and cheaper and because of the growing friendship.

55. The other areas which will become big in India are infrastructure, education and women. Because of a shortage of women in Asia the status of women will change. They will become Ist class citizens. It will be exactly as was in Europe 1000 years ago.

56. Commodity exchanges merging because of volume is good for the investor. It makes things more efficient and gives the investor a place to buy and sell.

57. The most obvious fact which the world can see is why doesn’t Taiwan with its capital and expertise make peace with China with its cheap manpower and large market. Sometimes the most obvious from outside is difficult to see from within.

58. In China if you want to do anything you can pretty well do it. This is not so in many of the other Asian countries because they have closed to that extent. The currency of China (Rinminbi) will replace the dollar.

59. Today Russia has 15 countries which will break up further into 50 countries. There is outlaw capitalism which is being practiced there. The Mafia strips assets and there is hardly any investment. It will gradually disintegrate. The military is hardly in power. Chechniya is a small country with a population of just 1 mn. and the army cannot control it for the last 10/12 years. Even the army is joining the mafia and gradually this is what will lead to Russia’s demise.

60. There is no formula for portfolio investment. One needs to invest organically. If one sees an opportunity, invest. Otherwise just hold cash. One need not continuously be doing something.

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.

Saturday, February 10, 2007

Investment Strategies in Global Market - Jim Rogers -2 of 4

21. One needs to buy cheap when nobody is talking about it. One will be careful to buy shares just now in India since everybody is investing in shares.

22. Jim is now buying airline stocks and bonds. In the last 5 years airlines have lost money but are operating at full capacity. One is supposed to buy low. Hence the rationale for Jim investing in airline stocks.

23. When interest rates go high shares will get hurt. In the U.S. interest rates will go higher in the next year or two.

24. India needs to open up. It is the worst bureaucracy in the world besides Pakistan and Bangla Desh. India needs to open up its agriculture, stock market and make its currency totally convertible.

25. One needs to be cautious about the stock market when foreigners start coming in. That is the time to sell not buy. Chinese stock market was declining for many years but will now start looking up. Myanmar which has been isolated for 44 years will open up. East Timor, Angola, Ethopia, Tanzania will start doing well. Europe will have problems because of bad demographics.

26. Phelps Dodge owns the 2nd largest copper mine in the world. It will not open up a new mine. It will concentrate on its current mine. This is true of all mining companies. The ones who have made it to the top in these companies are the ones who were cautious. They did not do any exploration. Those who did got fired.

27. One needs to buy the Index Funds instead of investing in specific commodities/stocks directly. 80% of the time the index funds outperform the direct investment.

28. While investing in stocks the ratios relevant for analysis are P/E ratios, Dividend yields, Price to book value etc.

29. One needs to look at iron ore rather than steel. Jim is more optimistic on Paper than steel though he has not invested in either of them as he believes that there are better options in other commodities as mentioned earlier.

30. In the last 30 years lead has not been used in petrol and paint and yet it is doing well. The supply is going down even though there is no demand increase. One needs to look at demand and supply simultaneously.

31. Worldwide sugar is projected to at least double in the next 5 years. Cotton is 50% below its all time high. And yet there is not a single article in Fortune magazine on commodities.

32. In a bull market it is better to buy and hold. If one is a good trader then one can buy and sell and make a profit.

33. Crude oil is going up like a rocket. Be careful. But buy at $ 40.

34. One can say that inefficiencies in China are promoting demand. However as China becomes more efficient there will be an increase in demand and the commodities supply will not be there. So commodities will be the market to be in.

35. Brazil has started exporting ethanol. Cars will run on ethanol. Sugar is being converted to ethanol. There will be more demand and less supply of sugar.

36. Rarely in history stocks go up without setbacks or correction.

37. Stocks went down in Japan though Companies’ profits went up. The stocks were overpriced. The bad market phase in Japan ended in 2003.

38. Today 45% of Japan’s trade is with Asia and 20% with America. It was exactly the opposite 13 years back.

39. Japan’s capital flows into Asia will increase. In fact the capital flows within Asia will increase.

40. Even though real estate is a bubble in New York still there are areas like Idaho and Okhlahoma where real estate is not a bubble. If everybody is investing in New York then that is a sign that there is a bubble in the making.

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.