Wednesday 15 August 2012

Wall Street Guru Jim Rogers: Investment Tips by Jim Rogers

Shares Investment: Pertaining China’s 2Q12 GDP figure of 7.6 percent, concerns have been raised and do you think that China is really heading for a hard landing?

Jim Rogers: Firstly, I would suggest not paying that much attention to the GDP figures because it is a lagging indicator and it does not accurately reflect the current conditions of the market. On the part of the slowdown in China, should we be surprised by it? I mean, they’ve been trying to slow down for the past three years and they have. As you put it, some parts of the Chinese economy will be expected to experience a hard landing, and some parts of the Chinese economy will be expected to do extremely well going forward. I expect the property sector will experience the hard landing and sectors like agriculture, infrastructure, and water treatment will be having a great potential and future.

SI: The Shanghai Composite Index sank to close at its three-year low on 20 Jul-12 even after the Chinese central bank surprised the market by cutting its benchmark interest rates twice in a month. What is your view on this?

Jim: I’m not buying Chinese shares right now if that’s what you mean. I own Chinese shares. Whenever the Chinese market collapses, I’ll buy more for my children. I don’t sell my Chinese shares; I just buy more whenever they collapse, but not now.

SI: Since mid-2011, gold price has been falling as China and India’s growth started to slow. Do you think that the price of gold will continue its downward trend and do you see this as a buying opportunity?

Jim: I’m not good at market timing so I can’t be absolutely certain. However, I do own gold and silver. I do not know what’s going to happen but gold has been going up 11 years in a row. I have not heard that for any asset without a down year. Gold is obviously correcting right now, maybe 15 percent to 20 percent from its all-time high, which is not very much for a normal correction in any markets (normal 30 percent to 40 percent). It will not surprise me if gold didn’t continue to correct. Moreover, gold has only been down 30 percent once in the past 12 years or so, which is extremely unusual. What’s going on with gold right now is abnormal, what is normal would be for gold to actually go down 30 percent to 40 percent. That will then be the time to buy, “if” and when that happens, I hope I buy more.

SI: In that case, do you have any target price in mind for gold?

Jim: No. I have no idea what’s going to happen. I know in the next ten years it will be much higher. I mean, depending on what happens in the world, like if Spain suddenly decides to declare bankruptcy and everything collapses, I’ll find something to buy as things go down.

SI: Last year you mentioned in a video that in the future that in the future farmers will be driving lamborghinis and stock brokers will be driving taxis, considering that and the surge in corn’s price and volatility in the commodities market right now, what’s your take on commodities?

Jim: My statement about farmers driving Lamborghinis and stock brokers driving taxis stand. I’m very optimistic about agricultural still. Agricultural prices will have to go up a lot. The inventories of food are near historic lows and we are running out of farmers. Therefore any shocks or bad news to agriculture will have enormous effect. Unless the prices of agricultural products go up higher to attract more labour, capital and management, we are going to have an unmitigated situation that the world has never seen.

SI: Shifting the focus back to the general economy, do you foresee a possible re-enactment of stimulus measures like operation twist if the Eurozone crisis does not improve?

Jim: Yes I do, unfortunately this is because all governments want to be re-elected, therefore they’d do everything they can to do so. All they know is to stimulate, whether it’s by printing money or spending other people’s money. It’s the wrong thing to do, but they don’t know any better. So you’re going to see a lot more government actions, because they’d want to be re-elected.

SI: Considering how long this issue has been dragging, what is your take on the constant pumping in of money to salvage the European nations?

Jim: I think it’s a wrong move altogether. I mean as you can see, so far printing money hasn’t work, and it’s not going to work this time. The world has staggering debt problems, so all these money printing is just going to make things even worse. Things are going to get really bad in 2013 and 2014. So they should be really careful about printing money.

SI: A few months back you mentioned about shorting emerging markets as a hedge, what are the emerging markets you are looking at that you think has a long potential for?

Jim: Well, I’m very optimistic about Myanmar, although there is no stock market there but I do own Yoma Strategic Holdings (Yoma). There are not a lot of stocks that you can own which do businesses in Myanmar, but Yoma does. Other countries that I’m looking at for the most part are mostly countries with no stock market yet but are going right. Like North Korea, I’m very optimistic about North Korea, but there’s not really a way to invest in North Korea yet.

SI: Lastly, what would your advice be to anyone who wants to invest right now?

Jim: If they don’t know what they’re doing, I’d advise them not to. If they do, opportunities can be found as there are many things which are knocked down right now, making such opportunities cheap. Essentially I think the most important of them all is to invest in what you know about. Don’t listen to someone you heard on the radio or internet, and let it sway your decision, they could be wrong. If you’ve done your homework, if you know what you know, don’t listen to others.

Jim Rogers is a keynote speaker at Shares Investment Conference 2012. Watch him share proven investment strategies and intimate thoughts ‘live’ in person!

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