Jim Rogers: Don't follow the crowd
Jody Clarke talks to adventure capitalist Jim Rogers about commodity investing - and buying land in North Korea.
Jody Clarke talks to adventure capitalist Jim Rogers about commodity investing and buying land in North Korea.
What's the most important lesson you've learned in 40 years of investing?
Go where most people are not. If everybody knows something, you'll face a lot of competition and you won't make anywhere near as much money. If you look for what other people are ignoring, you will probably do much better. Even back in Alabama when I had that peanut stand [see below], there was nobody else doing this at baseball games. My brothers and I started a stand and were successful. It's the same with investing. In fact, whether you're talking about music, art, investing, journalism or anything else, following the crowd is never going to make you very successful.
If you had just $1m to invest on behalf of your two daughters, where would you put it?
I'd put it into commodities right now. And maybe a few foreign currencies. The only asset class I know where the fundamentals are improving is commodities. The fundamentals at General Motors or Citibank are not improving. But the fundamentals for mining, agriculture and energy continue to improve because the supply of everything continues to fall. Farmers cannot get loans for fertilisers, although food inventories are at the lowest they've been in decades. And even if the world economy doesn't get better, commodities are still a good place to be because the authorities are printing so much money. Throughout history when people have printed a lot of money it's led to higher prices. Real assets have always been the best way to protect yourself when you've had inflation, whether it's silver, cotton or whatever.
What are your top commodities? You recently said you thought gold wasn't as attractive anymore
Well, that's only because gold has gone up by so much and silver and palladium haven't. I own all three. Gold is reaching an all-time high, but silver is still 70% below its peak performance and palladium is more or less at the same depressed level. I own them all, but you'd make more money with the other two than the one that's making an all-time high. I think I'm going to gain more in agriculture than precious metals. Sugar still has a great future. Even though it's doubled, and I'm not buying it now, it's still 70% below its peak. That shows you how depressed things are right now in agriculture. Here's something that is selling at the highest price in 30 years and it is still 70% below its all-time high. So you can see the fruits of opportunity that may exist in agriculture.
What's the best way to play precious metals - ETFs or stocks?
Well, if you're a good stock-picker and you can find a company that is going to discover a huge gold mine in Berlin then you should buy all you can. But the problem is that there are hundreds of gold-mining stocks and I think more money has been lost in these stocks over the last 100 years than in any other industry other than railroads and airlines. If you're a good stock-picker, then sure. But most people should buy physical gold, futures or ETFs (exchange-traded funds).
You like to invest in war-torn countries that are shifting to peace. What countries do you like now?
North Korea. There's going to be peace between north and south. If I were a bright young man I'd go to the demilitarised zone (DMZ) and buy land. When there's unification, which will probably come sooner rather than later, tourism companies will do well. The same goes for Taiwan, which is going to boom, and Myanmar.
Your new book is dedicated to your daughters. What lessons do you want them to learn?
I want them to be inquisitive, curious, to question everything, even me, their father to a limited extent anyway! And I want them to be persistent. There are plenty of smart people in the world who aren't successful. But if you're persistent you wind up being very successful.
Who is Jim Rogers?
After graduating, he spent two years in the army, then took a summer job on Wall Street, "just because I liked the guy who was there interviewing me". He fell in love with investing right away. In 1970, he co-founded the Quantum fund with George Soros, quitting in 1980 to travel the world, having multiplied its investors' money a staggering 43 times over. His book, Investment Biker, describes his travels.
Jim Rogers' new book, A Gift To My Children: A Father's Lessons For Life And Investing, is published by Wiley.