Jim Rogers is one of the world’s most successful investors. He was the ideas man behind George Soros the trader. When he talks, it is a really good idea to listen.
Jim Rogers was one of the first people to shout about commodities at the turn of the millennium. As commodity underinvestment was coming to fruition, inflation and the industrialisation of China were starting to become more important.
Jim Rogers manages to make the business of commodities comprehensible. He essentially tells the investor to look at long term demand and supply constraints. Examples he cites are changes in the way that car engines are designed and the way that affects metals demand or the weather patterns in cotton producing areas.
He is a passionate believer that investors don’t just look at bonds and shares. Commodities, he says, are not inherently risky – it is the leveraged futures that investors used to invest in commodities that were badly understood. Ways to limit risk are to either lower the risk or diversify the positions beyond what most small investors tended to do during the last boom.
In fact there are a number of ways of investing in commodities which included owning commodities directly and buying shares or Contracts for Difference in commodity producing companies. Another way to invest in commodities is to buy a contract for difference in a commodities index.
A really valuable part of the book is when Jim Rogers goes into a number of the main commodities so that there is some more detail looking at the intricacies of each market and ways to invest in it.
This book will do something unusual, and help a novice investor understand the intricacies of a completely new asset class.