Interesting arguments and great ideas

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	• Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market Jim Rogers Random House Trade Paperbacks, 2007 - 272 pages average customer review:based on 91 reviews view larger image
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highly recommended

The best Common Sense book

It take me a day to finish reading and it seem so simple and yet very enriching. It is all about supply and demand which is important in lots of bussinesses. This is how my Grandpa have teached me before. I strongly suggest all ages to read this book. It may looks easy and fundamental but the trend mentions in this book, i personally think is correct. Of course this book give you the facts, the rest is hard works then luck will come along the way.

A New Bull Commodities Market

A new bull commodity market is emerging. The twentieth century saw three long commodities bulls (1906-1923, 1933-1953, and 1968-1982), each lasting an average of 17 years. Price is a function of supply-and-demand, as supplies are plentiful prices remain low; as supplies become scarce prices will rise. An investor, who realizes when a supply and demand imbalance is occurring and invests, will make money.

Good investment is looking for opportunities and buying cheap then holding long term for significant profits. Stocks are over priced with excessively high P/E ratios. Can soars continue to soar higher? When commodity prices go up stock prices go down, the cost of doing business. Bonds yields are weak as lower interest rates have drove down yields. Real Estate is an investment bubble waiting to be burst with a possible resulting loss of wealth ranging between $2 to $3 trillion. Prices are too high for investors to make money. Currencies values are a function of national debt. The U.S is the largest debtor with $8 trillion dollars of international IOUs. For the last 20 years, the U.S has been borrowing in world financial markets because of large trade deficits and the continual borrowing has drove down the value of the dollar. Increased government spending and the Feds printing of money have created a devalued dollar and reduced foreign investment; in a 12 month period between June 2003 and June 2004 foreign investment went a negative $155 billion). The weaker dollar makes commodities seem more expensive, as in the case of oil; between 2002 and 2004 crude oil prices rose 64 percent in dollar and 16 percent in euros with the dollar losing 40 percent against the euro in the same time period. The strength or weakness of the dollar has nothing to do with the price of the commodity. Commodity price is driven by increasing demand resulting in shortage or perceived shortage.

"Commodities are so pervasive that, in my view, you really cannot be a successful investor in stocks, bonds, or currencies without understanding them." Investing in commodities can be a hedge against a bear market, rampant inflation, and a major downturn in the economy. One reason in the 1980s and 1990s companies and stocks did so well was raw materials were in a bear market and investors realized in the late 1990s the commodity bear market was ending and the stock bull market was coming to an ending, also. The bear commodity market came to an end in 1998 reaching a 20 year low. The cost of doing business was eating away profits taking drive for growth away from companies. Millions of investors listening to experts advocating the new economy were financially hammer and are still trying to break even.

Why buy commodities now? The current supply-and-demand balance for commodities worldwide is out whack. Time will turn any oversupply of a commodity into an empty warehouse unless its inventory is replenished. Demand for supplies increased and years of cheap oil drove a taste for gas guzzlers; low mortgage rates increased the size of homes and the cost too heat and cool them; bigger cars and home ate up lumber, steel, aluminum, and lead. Now China has started to gobble up commodities. China has the fast growing economy in the world for 2003-2004 at 9 percent. China imports half of its copper, three-fifths of its iron ore, and one-third of its oil; and draining Europe re-cycle plants of every bit of scrape they can produce. China must feed 1.3 billion people and the Chinese are eating more meat increasing the demand for corn feed; China is importing Soy from Brazil and Australia; and China is importing more sugar. All at a time when China is short of every raw material that it needs. The imbalance is exploding demand while supplies are being depleted. Let look at the basic survival commodities: Oil, Natural Gas, Metal, and Sugar. Oil: No Major oil field discoveries, giant reservoirs are 50 to 70 years old, no new U.S oil refineries, drilling rigs decreased from 4,530 to 1,201 (1981-2004). U.S officials and companies are looking to Russia to pump enough oil to satisfy hunger for energy. Natural gas: North America has not kept pace with demand and officials are expressing alarm about possible prolonged shortages of natural gas. Gas fields in Canada and Alaska are still without pipelines to bring gas to the market. Metals: No new mine shafts in 20 years world-wide. Sugar has become an energy commodity having been turned into ethanol to power vehicles. More than 60 percent of the world's ethanol is produced from sugar. Brazil is promoting ethanol sales in China. War and political chaos push commodity prices higher.

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Worth its weight in pork bellies...

Jim Rogers is one of few individuals on the planet whose investment advice is worth listening to. And that's an understatement. Jim co-founded the Quantum Fund with George Soros, later retired at age 37, and has traveled around the world twice, each time collecting even more investment wisdom from each of the hundreds of countries that he's visited.

In Hot Commodities Jim Rogers parlays his travel and investment experience into investment advice for now and the coming next ten years. As he says on page 10, "Most investors could use some mental deprogramming. At certain points in history, stocks (and bonds) are not the best investments to make." Of course, he's talking about investing in commodities. Jim goes on to soundly counter all the false beliefs most of us have about commodities investing. He provides a short history of commodities trading and then gives an excellent tutorial on commodities trading and termonology. Why not just buy stock in commodity-related companies? A recent and thorough Yale study found that returns from commodities were triple those of companies producing those commodities.

Besides sugar and corn, you'll also find the book filled with Jim's thoughts on gold, oil, and markets like Brazil and China. Here's one of my favorite Roger's quotes: "Spain was the greatest economic power in the world in the sixteenth century; the rich and the powerful of the eighteenth-century world spoke French; the nineteenth century belonged to Britain; and the twentieth was the American century. The twenty-first will belong to China. History has not been kind to empires."

If you're interested in turning current world events into money, you'll love this book.

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It's the same old song...

I like Jim Rogers's style; it is intelligent, well-reasoned and informative. It is the substance that causes problems starting with the title. If "Anyone" could invest profitably in the world's be market we would all be sitting at our PCs trading coffee, coal and tea futures left and right (as many did during the tech boom). If "Anyone" was prescience about commodities, it would be the first time considering the experts (quote unquote) caught off guard by the drop in silver, rise in coffee, the glut (then shortage) of oil and last, but not least, the huge drop in the market itself.

If you are looking for general information about the "market of markets" along with a little history, some geopolitcal musings and some common sense approaches, this is the book for you. If, instead, you want to make a fortune you would be better served attending a seminar on buying and selling property "with no money down." (

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Interesting arguments and great ideas

This book provides arguments for why commodities should not be an over-looked asset class for any diversified portfolio. The arguments presented in the book are basically derived from observations and intuitive reasoning rather than heavy fundamental or technical analysis. Nevertheless, the book is engaging and presents almost an A to Z of commodities market. The first part of the book focuses on the historic trends associated with demand/supply of commodities (oil, sugar, etc.) and theorizes that the "bull market" for commodities is going to be a long term phenomenon. The next component of the book addresses on how to "play" the commodities market and explains the functioning of the market with descriptions for colorful terms used by the traders.... The last component of the book looks into the future of a few commodities, with each having an entire chapter devoted to it...coffee, sugar, oil, gold, lead, etc. There is also an interesting (not comprehensive, though)comparison of Indian and Chinese economies.

Readers looking for specific investment vehicles may be disappointed with the book as it lists very few specific funds or stocks to take advantage of the commodities market. However the reader is most likely to be convinced to take a hard look at his/her portfolio in the light of the arguments presented by Rogers.

It was surprising to find that the book did not have a list of chapters or table of contents; in addition, only the first chapter had a synopsis. Such editorial oversights diminish the quality of the book, but not the arguments/theories presented in it. A good read for any investor!

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reviews: 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, page 14, 15, 16, 17, 18, 19

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