Editor’s note: We’re pleased to be rolling out a summer series on investing books. Each week we’ll be reviewing two books — one classic, one a bit newer. Our editors and contributors will offer their perspective on some popular titles. We hope you find some inspiration.
During the 1970s, he and George Soros started the Quantum Fund, one of the first hedge funds. From 1973 to 1983, the overall return came to a staggering 4,200%, while the S&P 500 only climbed 47%.
Then Rogers went on to create the Rogers International Commodities Index (RICI) in 1998 — an index “designed to meet the need for consistent investing in a broad based international vehicle.”
So when Jim talks, it’s a pretty good idea to listen.
One way to “listen” is to read his books, which are filled with great advice and are always fun to read (often detailing his around-the-world travels). His latest book is no exception. Street Smarts: Adventures on the Road and in the Markets sheds a lot insight on how Jim grew as an investor over the years.
To start, he shows that investing is not just about buying assets, as a lot of money can be made by going short. However, he does note that the strategy can be risky and that, as such, investors must be highly disciplined. In the early years of his career, he went broke twice because of short selling!
Jim also likes to focus on the main drivers of an investment, not the minutiae. For example, here’s how he looks at cotton:
“All you have to know about cotton is this: Is there too much cotton or too little cotton? Cotton does not care who the chairman of the Federal Reserve is. Now, figuring that out may not be easy at all, but the question itself is simple and in the end it is the only question with which you have to be concerned.”
What’s more, Jim is a big believer in focusing on secular trends. After all, he has done quite well with the commodities revolution … and there are some important advantages to mega-trends. A big one: They can make up for lots of mistakes. Even poor investments can do well if the general trend is positive. Plus, such a strategy means that there is less need to change holdings.
So what is Jim focused on right now? Yep. It’s commodities. He thinks the secular trend is still intact. Of course, a key driver is the continued growth in the global population as well as the increase in wealth in emerging markets. Plus, it’s getting tougher to find arable land and there are not many farmers.
There are many mega-trends to choose from, though. Just look at cloud computing, mobile, biotech and perhaps even clean-tech. These are all massive opportunities and should lead to the next Microsoft (MSFT), Amazon (AMZN) or Amgen (AMGN).
Of course, Jim’s book is not without some issues. Perhaps the most nagging one is that he goes on nearly constant rants against presidents and Fed chairmen … and seems to think they have all been idiots and know nothing about economics.
Still, for the most part, Jim has quite a few important things to say about investing — and has a tremendous track record to back them up.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.