Had you been standing on the banks of the River Thames in nineteen sixty six watching the annual university boat race, you wouldn’t have noticed anything out of the ordinary. There was a group of athletic young men all who you could imagine taking their rowing careers forward and having a shot at a gold medal in the next Olympics. But there was one small figure among them that had more than a passing interest in gold. His name was Jim Rogers. Fifty years later, the Oxford University cox from the nineteen sixty six boat race is someone that makes a point of carrying a piece of gold with him everywhere he goes. He’s quietly set the world of investment on fire for nearly half a century and, following the dot com bubble of the late nineties and the financial implosion of two thousand and eight, he believes that gold is one of the few things that has any type of intrinsic value anymore.
An American by birth, Rogers was drafted for military service in nineteen sixty eight to fight America’s controversial war in Vietnam. On his return he landed a job at the investment bank, Arnhold and Bleichroder. This was a big step up for the young Jim, who had learned all about stocks and shares working for a smaller broker a few years earlier. It was at this investment back that he met George Soros, another world-class investor who we featured earlier on in this mini-series. Together they formed the hugely successful company Soros Fund Management. In an outstanding eleven year run, Rogers and Soros saw their fund make four thousand two hundred percent versus the S & P index which advanced just forty seven percent in the same period. It was then, in nineteen eighty, at the age of just thirty seven, that Rogers decided to retire.
It was almost two decades before he formally came back into fund management and he was a changed man. Disillusioned by the way governments and central banks had got high on debt and currency deflation, he looked for value in new areas and turned to agricultural investments. No matter what the state of the world. Whether it was at war or peace, in good economic times or bad, people still needed to eat. He recognised that, as the population of the world grows, the agricultural land supply diminishes yet the demand for food still increases. Its a perfect storm which means the price of land used for rearing animals and growing crops is virtually guaranteed to continue on an upward trend for decades to come.
Jim Rogers is a big picture investor. He doesn’t know or care about how one company is performing against another in its sector. He believes the market is nearly always wrong. He believes everything is interconnected, once famously stating “I don't see how you can invest in American steel without understanding what is going on in Malaysian palm oil.” For Rogers, everything has to be factored in before making an investment decision. From government deficits and policy to inflation figures and even the climate. No stone is left unturned before Rogers makes his decision to open his investing wallet. He also takes his own medicine. So concerned is he about America’s future that he’s moved his family lock, stock and barrel to Singapore.
So what lessons can we learn from an investor like Rogers? Perhaps the biggest one is that inactivity is just as useful as activity. What I mean by that is that if there’s no good trades out there, don’t make one for the sake of it. Have patience and wait for the next one to come along. He was exactly right in calling the boom in commodities in the nineties but waited for the right time to invest. He saw the US housing collapse coming for years but waited for the right time to short Fannie Mae as its share price fell from sixty dollars to just a few cents. As he says “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up.” In the meantime, he doesn’t spend a dime.
Another lesson we can take from Rogers is not to be emotional about your investments. When you uncouple your emotion and rely on cold hard facts and logic, you’ll be amazed at how much your judgement improves. Lastly, never ever expect to time all your trades perfectly. As long as you don’t lose money, you’re ahead of the crowd. And speaking of crowds, don’t follow them. Jim Rogers made his name and his fortune by often doing the very opposite to the majority of seasoned investors around him.
If you want to follow Jim’s advice, now might be the time. Both he and George Soros think the world economy, and particularly heavily indebted Europe, Japan and North America, are about to go through a “trillion dollar biblical crash”. But as with any investment, make sure you do your research before making that all important decision. Both Rogers and Soros have deep pockets and can afford to take a hit so if you think you can win big by following their investment strategy, be very careful out there.