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.


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