For Jim Roger's, India’s only a tourist spot

MUMBAI: “I have a dream, a song to sing, to help me cope with anything,” sang Abba many years back. Abba just sang the song, Jim Rogers is actually living it.

So who is Jim Rogers? A  Wall Street legend who chose to retire at the age of 37, after the fund that he ran gave 4200% returns over a 10-year period, compared to S&P 500’s 50% return. Rogers chucked up a successful Wall Street career to chase his dreams. And he has since entered the Guinness Book of World records for becoming the first hedge fund manager to drive around the world — not once, but twice.

In 1992, Rogers travelled 100,000 km around the world on a bike. The next time, towards the end of the Millennium, he went around the world in a Mercedes, driving across 116 countries and travelling 245,000 km.

In between and after his two journeys, he has found the time to teach finance at the University of Columbia.  He is the author of three best sellers — Investment Biker, Adventure Capitalist and Hot Commodities. A man who hated kids and now has a daughter.  “I was dead wrong. This little girl is so much fun for me”, he says.

India is Rogers’ favourite country, but only as far as tourism is concerned. He is cautious about the Indian stockmarket, and he has sold out of the Indian markets.

“I wouldn’t be buying into Indian stocks,” he says. As soon as he landed up in Mumbai, on his way out from the airport, he could see billboards urging people to buy shares of companies. And this, he feels, will not happen when the markets are at the bottom. Every time foreigners flood the stockmarkets, the market is usually at its peak.  Like others of his ilk, he is bullish on China. Chinese, he says, are the best capitalists in the world, Communism not withstanding. And he has been teaching his daughter aged 2 years and 9 months Chinese, because China is where the opportunities are and will be in the days to come.  But he foresees a setback in Chinese real estate.  And his advice to global investors is, “If you see problems in China, pick up the phone and buy China.”

Rogers isn’t gung-ho on the world’s reserve currency, the dollar. The Greenback, he feels, is a terribly flawed currency. The US is the world’s largest debtor nation and owes the world around $8 trillion, and this has been going up at the rate of $1 trillion every 15 months.

His lack of confidence in the greenback can be made from the statement, “My baby girl has a Swiss bank account. She knows what they are doing to the dollar. She’s got to take care of me”.

But what Rogers is really gung-ho about are commodities. He draws a parallel between mutual funds in the 1980s and commodities now. In the 1980s, no one really knew what mutual funds were and how one could invest in them.

Commodities are at a similar stage right now. And his confidence is reflected in the fact that his baby girl owns only commodities. Investors should buy into commodities, he feels, as history has shown that bull markets in commodities last from 15 years to 23 years.  Given this, the current bull run will last till anywhere from 2014 to 2022. The reason for this bull run is very simple — a gap between demand and supply.

People around the world are not really investing in productive capacities as far as commodities are concerned. Take the case of oil, the biggest oil fields in the world — North Sea and Alaska — have been on a decline. But the demand for oil has constantly been going up.

When reminded of the Saudi Arabia’s oil reserves, Rogers feels much is being made about them. In 1979, the Saudi oil reserves stood at 245 billion barrels. In 1988, Saudis came up with a new figure — 260 billion barrels — despite no major oil discoveries being reported in the intermittent period.

And from 1988 to 2006, every year, Saudi Arabia has been reporting reserves of 260 billion barrels, and the media has been lapping it up. In the same period, 63 billion barrels of oil have been produced. Something here is seriously wrong as far as the numbers are concerned.

And when it comes to alternate sources of energy, not much progress has been made, Rogers feels. Solar and wind power are still not competitive. Given this, and given the fact that it takes a long time for new supply to hit the market and consumption patterns to change, oil prices will keep going up.  Rogers remains optimistic about gold prices as well. Gold is currently at $540 per ounce, nowhere near the all-time high of $875 it touched long time back.

So, it still has a long way to go on the upside. Rogers remains optimistic about agriculture commodities like sugar as well. As countries prosper, they consume more sugar.

If you still don’t believe that commodities are the place to be, then let’s throw in some numbers. His index fund, Rogers international commodities fund, has delivered a return of 253.3% between August 1998 and January 2006.

In the same period, the S&P 500 gave a return of 28.1%. But the world at large continues to remain unaware of this phenomenon. World over, there are around 70,000 mutual funds investing in stocks and bonds and under 10 mutual funds which invest in commodities. Isn’t it time that we woke up to this?