Jim Rogers: Investment Insights and 2016 Outlook

There are but a few brilliant investment gurus today who actually prove their expertise with actual solid gains on their investment portfolios.  However, Jim Rogers is a class of his own.  He not only produced stellar gains by putting his money where his mouth is.  He has actually gone as far as relocating his home and his family from a western location to an Asian one because he believes that the US economy is inevitably bound to collapse and he sees the best growth prospects to be in China.  Rogers sold his New York Mansion for 16 million USD and transferred to Singapore in 2007, particularly so that his two daughters could learn to speak Mandarin. He believes that if it was a smart move to relocate to New York in 1907, it was also a smart move to relocate to Asia in 2007.Now if that’s not proof of conviction, I don’t know what is.

In 1970, Jim Rogers, then aged 28, worked in an investment bank together with George Soros.  Then in 1973, the two left the investment bank and co-founded their own hedge fund called Quantum Fund.  Quantum Fund put its money in international investments and was able to generate an astounding 4200% over ten years from 1970 to 1980. In contrast, the S&P gained only 47% for the same time period.  With his gains, Jim Rogers decided to retire and focused on managing his personal investments.  Now with more time in his hands, Jim Rogers motorcycled around the world, doing investment studies on each country he visited.

Jim Rogers has provided many investors a rich wellspring of investment insights, drawing from his many successes and experiences.  Unlike George Soros who finds it difficult to verbalize his investment processes, Jim Rogers is a wonderful communicator and has written a lot about his investment ideas.  More than just ideas, he actually acts on what he is convinced of and immerses himself in cultures and localities across the globe in his search for the best international investments.

Some of his famous investment insights include the following:

“Most successful investors…do nothing most of the time.”Rogers once mentioned that brokers don’t like him that much because he rarely trades and holds on to his investments for years.  Brokers only earn a commission when you buy or sell.  The individual investor can do well to take heed of this.  At times, some investors will be monitoring the markets on a day-to-day basis and actually be overtrading.  Overtrading leads to higher brokers’ fees and commission expenses which eat up investment capital. Focusing too much on the short term fluctuations can also cause unnecessary panic or stress and lead to an investor getting caught in whipsaws and bull traps.

“On Wall Street… there’s no truer adage than ‘markets can stay irrational longer than you can stay solvent’” Rogers shorted a few companies in the 1970s and went broke because of his trades.  The prices of those companies did eventually crash in two to three years, but not after Rogers had to cover his shorts.  It was then that Rogers realized that you could be smart and still end up broke.  Investors must realize that the markets don’t always follow a rational path.  Fundamentally, market prices depend on how much people are willing to pay for something – and this in turn is affected by human psychology and perception – emotions of greed and fear – which more often than not are irrational.  Just relying on fundamentals, numbers and charts, an investor can predict a likely outcome.  But the market will not go on a straight path towards that outcome.  Without staying power, even Jim Rogers couldn’t wait for the markets to gain rationality.

As for his investment outlook, Jim Rogers still believes that the world economy as a whole is bound to get into bigger trouble this time. He says he is laying low in his investment activities for now as he foresees another global crisis to happen (instigated by the US’ unbridled spending and soaring debt).   He shorted junk bonds in 2015 and is still bullish on agriculture.  Despite his pessimistic outlook on the US economy, he is actually betting on the US dollar to increase in value in view of a global currency crisis he sees forthcoming.   According to Rogers, the world still currently views the US Dollar as safe haven and thus he holds a lot of US dollar investments. Rogers isn’t buying gold yet but believes there will be a buying opportunity in the next two years or so.