Rogers - Hot commodities: how anyone can invest profitably in the worlds best market

JIM ROGERS

This book is a guide to managing your money and achieving your financial goals.
It is not a guarantee; all investment decisions have inherent risks.

This paperback edition published in the UK in 2007
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First Published in the United States by Random House

Copyright 2004 by Beeland Interests, Inc

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British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN 978-0-470-51076-6 (PB)

The next bull market is here. Its not in stocks. Its not in bonds. Its in commodities and some smart investors will be riding that bull to record returns in the next decade.

Before Jim Rogers hit the road to write his best-selling books Investment Biker and Adventure Capitalist, he was one of the worlds most successful investors. He co-founded the Quantum Fund and made so much money that he never needed to work again. Yet despite his success, Rogers has never written a book of practical investment advice until now.

In Hot Commodities, Rogers offers the low-down on the most lucrative markets for today and tomorrow. In late 1998, gliding under the radar, a bull market in commodities began. Rogers thinks its going to continue for at least fifteen years and hes put his money where his mouth is: In 1998, he started his own commodities index fund. Its up 165% since then, with more than $200 million invested, and its the single-best performing index fund in the world in any asset class. Less risky than stocks and less sluggish than bonds, commodities are where the money is and will be in the years ahead.

Rogerss strategies are simple and straightforward. You can start small a few thousand dollars will suffice. Its all about putting your money into stuff you understand, the basic materials of everyday life, like copper, sugar, cotton, corn, or crude oil. Once you recognize the cyclical and historical trading patterns outlined here, youll be on your way.

In language that is both colorful and accessible, Rogers explains why the world of commodity investing can be one of the simplest of all and how commodities are the bases by which investors can value companies, markets, and whole economies. To be a truly great investor is to know something about commodities.

For small investors and high rollers alike, Hot Commodities is as good as gold or lead, or aluminum, which are some of the commodities Rogers says could be as rewarding for investors.

ALSO BY JIM ROGERS

Investment Biker

Adventure Capitalist

For my Baby Girl,

who owns commodities but does not yet

own stocks or bonds

COMMODITIES get no respect.

Too many so-called smart investors consider themselves diversified if they have money in stocks, bonds, real estate, and maybe, for the sophisticates, some currencies, or timber. But commodities rarely, if ever, hit the radar screen.

It doesnt make sense to ignore a whole asset classparticularly one that has done quite well over time, contrary to all the myths about how risky, volatile, complex, and downright dangerous putting money in commodities is supposed to be. Successful investors look for opportunities to buy value cheap and hold it long-term, regardless of the market. So what if commodities are new to you. All it takes is a little homework, and there is no better motivator to be a fast study than the prospect of making some money. Let me tell you a story about one investor who started out knowing zero about commodities (and every other kind of investment) and ended up doing just fine.

In 1964, on a whim, I took a summer job in a firm on Wall Street. All I knew about Wall Street was that it was located somewhere in New York City and that something bad had happened there in 1929. Frankly, I didnt even know that there was a difference between a stock and a bond. But it was clear that there was money to be made on Wall Street, and being a poor kid from Demopolis, Alabama, who had already been lucky enough to go to Yale, I was eager to make some money to buy my freedom.

And while my ignorance about the financial world was profound, I had always been interested in current affairs and history, and it was a revelation to learn that someone on Wall Street would actually pay me for figuring out that a revolution in Chile would drive up the price of copper. My luck continued with a scholarship to Oxford, where I studied politics, philosophy, and economics; I also began using what I had learned in my summer job to invest my scholarship dollars before it was time to pay the bursar at Balliol College. After Oxford, I did a stint in the U.S. Army, where I distinguished myself mainly by investing the post commanders money in the stock market for a tidy return. Having served my country, I returned to New York in 1968 to begin my career in high finance. I had $600 in my pocket.

My arrival on Wall Street coincided, as it turned out, with the final run-up of a two-decade-long post-World War II bull market in stocks. At the time, who knew that 68 was the end for stocks? Not I, certainly. I was much too busy learning the ropes of the markets to focus much on the big picture. And I still had a lot to learn.