The best investment analyst in the English speaking world is Jim Rogers. You likely know who this is already, but if you don’t, he is the fellow who partnered with George Soros to create the Quantum Fund, one of the most successful hedge funds in the world. During their partnership, George Soros was the trader and Jim Rogers was the analyst. Together, they made an enormous amount of money.
For quite some time, Jim Rogers has been retired, investing his own money, while gallivanting around the world. You can read about his travels and view his pictures at www.jimrogers.com. He is still very much an active investor, and he just turned out another fabulous book about the financial markets.
His latest piece is required reading for any investor. The book is called Hot Commodities (2004 Random House). In it, he contends that we are in the middle of a 10- to 15-year commodity bull market, which began in 1998. He cites the fact that there have been no major oil field discoveries for the past 35 years and that China’s voracious appetite for the resource will very soon rearrange the globe’s political balance. He also thinks the price of other commodities, like wheat, corn, copper, and aluminum, will experience substantial price increases over the coming years.
Also noteworthy, he writes about the negative correlation between the stock market and the commodities market. He cites proven academic research that, since 1959, commodities futures have produced better annual returns than stocks or bonds. His contention is that bull markets in commodities are commensurate with bear markets in stocks and that the economies of countries like Australia, Canada, Chile, and Peru will do very well over the next decade because they are rich in metal resources.
So convinced is Jim Rogers of the current commodities bull market, that he actually created and invested in his own index fund, the Rogers International Commodities Index, which is up some 200% from its inception.
I wholeheartedly believe in Jim Rogers’ global analysis of commodities. This is why I’m not too excited about the broader stock market for the next few years.
So, what can you do if you believe in the commodity bull market? You can invest in a commodities index like Jim Rogers’ or others. You can buy stock in energy and metal resource companies or mutual funds, and you can invest in commodity currencies like the Australian or Canadian dollar. No matter how you want to play it, your portfolio will be better off with some commodity exposure.