Jim Rogers’ BET ON asia

p64aAsian Property Review chats with legendary investor Jim Rogers during his recent trip to Kuala Lumpur. Although not a real estate investor, Rogers shares some investing tips which can also apply to real estate investments.

Text & Photography by Jan Yong

Jim Rogers makes a very good interviewee. In fact, the best I have had so far. He says the most eye-popping statements and means every word. That’s what I like about him. A man who is not afraid to let known his views, no matter how at odds they are with conventional investment thinking. But then, Jim is no ordinary man.

The jovial investor, author and adventurer shot to fame after Quantum Fund which he cofounded with George Soros gained an incredible 4,200 % from 1970 to 1980 compared to S&P’s 47%. After that stellar performance making Quantum Fund one of the world’s most successful hedge funds, Rogers quit full-time investing in 1980. He travelled the world a few times via motorcycle and a custom-made Mercedes (which got him into the Guinness Book of World Records) and wrote some of the most entertaining books on investing ever.

Some of his pearls of wisdom, now immortalised in his book Adventure Capitalist states:

“ The way of the successful investor is normally to do nothing – not until you see money lying there, somewhere over in the corner, and all that is left for you to do is go over and pick it up. That is how you invest. You wait until you see, or find, or stumble upon, or dig up by way of research something you think is a sure thing. Something without much risk. You do not buy unless it is cheap and unless you see positive change coming. In other words, you do not buy except on rare occasions, and there are not going to be many in life where the money is just lying there.”

For many Asian investors, his Quantum Fund co-founder, Soros, seems to evoke a bit more emotion – Soros has been blamed by some quarters, notably former Malaysian Prime Minister, Tun Dr Mahathir Mohamad for shorting the Thai Baht which eventually triggered the Asian Financial Crisis during 1997 – 98 when many Asian currencies collapsed.

p64cJIM
Nowadays, the Singapore-based super investor is a keen advocate of commodity and agricultural investments. His latest investment destination wish list is North Korea. “North Korea today is like what Beijing was in 1978 till early 1980s under Deng Xiaoping. The North Korean young leader, Kim Jong-un has been exposed to the world and so has his underlings. His generals, when they were young, had been to Beijing and had travelled there again in recent years. They are awed by the transformation that has taken place in Beijing while nothing has changed in North Korea.

“Kim was educated in Switzerland and has tasted a different world – he wanted to try something new and has made some dramatic changes since 3 – 4 years ago. So far, his underlings seem to be in agreement. The desire for change is very strong in North Korea. Doubtless, Kim made mistakes too just like Deng Xiaoping did but in the end, the changes in China took place. Maybe in North Korea, the generals will effect the change but I am not as worried about political risks there as I am about some other places,” Rogers reveals.

Rogers, who has been to North Korea twice, says he would like to buy agricultural land in North Korea; unfortunately foreigners can’t buy land there at the moment. He likes the Hermit Kingdom because it’s still cheap and there are dramatic positive changes taking place there.

“Whenever a place is emerging and there are dramatic positive changes taking place, you can make a lot of money, whether in shares or in property.”

He adds as he flips through Asian Property Review magazine (June – July issue), “I am glad you are writing about emerging countries like Sri Lanka, Myanmar and Mongolia in your Cover Story – these countries used to be very cheap. That’s what I mean – go in when the country is emerging when prices are still cheap. Whatever success I have had in life has been through buying things very cheaply.”

AGRICULTURAL LAND IS SEXY
But more so, Rogers, 74, is best known as the “Commodity King” for his golden touch in commodities. In fact, he’s a legend when it comes to investing in commodities. In 1998, he founded the Rogers International Commodity Index. “Most commodity prices have seen their lows and are near or at the bottom. Prices will not skyrocket while they are still making their bottom. Meanwhile, stocks have not made their bottom yet. As to oil, I highly doubt it will go down to as low as USD10 a barrel. Oil price might go up again,” he predicts.

“I own gold and silver, and the US dollar. I am expecting another opportunity to buy gold at a lower price and if I am smart, I will buy more,” the globetrotting investor reveals.

Screen Shot 2016-08-08 at 1.30.07 PMIf there’s anything Rogers hardly touches, it’s real estate. “I own very little real estate anywhere in the world.

Properties in many places are very overpriced, for example, Hong Kong, Singapore, New York and London. Many places have a bit of a property bubble including parts of China but not in Japan,” he observes.

However, there is one type of real estate he would buy – agricultural land. “Believe me, in 10 – 15 years’ time, farmers will be richer than bankers. The signs are already here … banks around the world are laying off workers while prices of agricultural land are on the rise,” he says. “So, yes, drop that MBA you are doing now unless you really love finance. Learn to drive a tractor instead because there are better opportunities in farming,” predicts Rogers, who was educated at the prestigious Yale University and Oxford University.

He continues: “If you buy farmland, you will do very well. Agricultural land has great opportunity in Southeast Asia and most parts of the world.”

HOT ON CHINA
Rogers notes that China is buying up land everywhere including Central Asia and Africa where it’s very cheap. “I guess they see what I see,” he quips.

Rogers is certainly full of confidence in China. When we first met, he greeted me in Mandarin, “Ni hao ma”? [How are you?]. He suggests learning Mandarin because it’s going to be more widely spoken as China increases its presence and influence around the world. The father of two walks the talk by moving to Singapore “so my kids can speak Mandarin”. Today, both his daughters speak fluent Mandarin and compete with each other to save as much as possible for the future, thanks to their father’s belief that “The best way to live is to save as much as possible for the future”.

 

Q & wiAth Jim Rogers

p64b1. Will China dominate the world economically?
JR: Yes, no question about it but it doesn’t mean it won’t have problems along the way. The US used to dominate the world economically; and it also had problems along the way, for example, it’s experienced 15 Depressions and a civil war. It also has few human rights and not much rule of law, but the US still became extremely successful. Similarly, China will have its own set of problems but that doesn’t detract from the fact that it has the makings of a very successful nation.

The US and Europe are deep in debt and even Japan has slipped into it. Luckily for the rest of Asia, there are no huge debts and this is one of the reasons it will pull through. The cause of the huge debt is basically lack of discipline. Everyone in the West expects free lunch and got it. One hundred years ago, the US saved for the future just like Asia today. But once they became successful, they got complacent. It always happens – it’s not a matter of ethnicity, nationality, nor genes – it’s at the point of history which determines the situation. As they say, after the third generation, wealth is squandered.

2. Are central banks helping the situation?
JR: What we need to be concerned about is central bankers who are doing absurd stuff like imposing negative interest rates. Negative rates have not and will not work. Central bankers have staggering amounts of money at their disposal so they could make it look right for a long time. They can also throw their weight around. But eventually they will lose. Central banks have always been wrong in the end so, it’s a good strategy to bet against central bankers.

3. Any central banker that has got it right?
JR: Yes, one of them is from India but he’s got kicked out – the smart ones are usually kicked out in the political world. The good ones don’t last very long. Markets will not put up with the central banks’ policies eventually. Somewhere along, central banks will realise low or negative interest rates are a mistake. But so far, the majority are still keeping the policy and I don’t see them raising rates anytime soon.

4. With the world now experiencing an economic slowdown which is triggering many dire predictions of a global recession and collapse of economies and currencies, how should investors respond?
JR: The next 2 – 3 years will probably be bad for the big economies like the US, Europe and Japan. That means it will be bad for the whole world because if the largest economies suffer, everyone suffers. But Southeast Asia is less damaged because it is not as deeply indebted like the US and the UK. It has a lot going for it but it is still vulnerable.

Many governments around the world are running out of money. If banks collapse, you may not get your money back like in Cyprus. You need to find a safe institution to park your money – there are some out there. Do your research and never just listen to what other people tell you. Invest only in what you know best based on your own decision; for instance, don’t short-sell stocks if you don’t know what it’s all about. You may lose money but lose a lot less than if you listened to others.

I own some agricultural commodities, a few things in China, a lot of US dollars – but that’s me. Don’t listen to me.

For property investors specifically, you can still buy a good quality property in a good location at a good price. You will still emerge unscathed even in a bear market when everyone else is suffering. Better still, buy farmland in Southeast Asia; you will do very well.

5. How will Brexit change the economic landscape?
JR: Brexit may make things worse. It will slow down the UK economy because of uncertainty surrounding the exit process. Scotland which has quite a bit of oil may decide to leave the UK which will hurt the UK as the latter has huge debts and trade deficits. Meanwhile, the City of London will lose some of its shine and income because other European cities may want to compete with it to attract investments. I expect some or maybe all of these to happen.

6. Have you got some of your predictions wrong before?
JR: Many times. Well, I ran into my first wife by accident and I am glad we didn’t stay married. But I was very sad when we split up at the time. That’s one of my wrong predictions.

7. Should people travel around the world at least once in their lifetime?
JR: Do it – it will teach you more about the world around you and teach you about yourself too.

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