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Money Master – Jimmy Rogers

I have come into contact with this legendary investor several times in my life, including lunch or dinner here and there. First, we are dealing with a very intelligent man. Raised in Alabama to poor parents, he went to Yale on a scholarship and never looked back. At a very young age, in his 20s, he became a partner with George Soros himself. Soros ran the now famous Quantum Fund, a hedge fund years before his time, and Jimmy Rogers was his equal partner.

There was a time over a period of about 10 years when Jimmy Rogers was among the best informed people in the world. As the story told me once, I used to read 15, 16, 17 hours a day, just absorbing information and then relating it to the investment. In the 1970s, when he ran the Quantum Fund with George Soros, they had a track record of performance that is the stuff of legends. The return was 40 times its money in 10 years. During the same time period, the stock market was up a small fraction of that number. He retired from his day job with George Soros at the ripe old age of 37.

He has written two very entertaining and informative books for investors. You should read both. “Investment Biker” is one in which he details his trip around the world on a motorcycle while researching investment opportunities. The other is “Adventure Capitalist”, written years later, different ride, different bike (this time a modified yellow Mercedes, same goal-investment opportunities, same goal. I would acquire it with the world firsthand and look for opportunities to investment.

Jimmy Rogers is an investor who likes primary sources of information. He’s not the type that would read a Forbes magazine article about General Motors. He’s the type of investor who would read government summaries of car manufacturing information and find out for himself. In our meetings, he told me a few things, which have stuck with this investor for several decades.

He asked me if I had ever been bankrupt. I told him no. He said, “Too bad, there’s something about being at the bottom, once or twice in your life, that teaches you things that you can never win any other way.” As usual, Jimmy Rogers was right. You have to learn at the bottom, to know what to do at the top. It will also keep your head clear, when you are at the top, and everything from that view will look pink and beautiful. It always looks like this before the fall from grace.

Jimmy Rogers also stated that he never uses Excel spreadsheets to do business calculations. It will also not allow anyone doing analysis to use Excel. He feels that there is something to be learned by doing it with pencil, eraser and the old-fashioned way. It may take hours instead of minutes, but the data will have more meaning. The way the data moves when the numbers change will have more impact.

He also said that when he was investing in the old days, he would read each company’s annual report cover to cover. You said that if you read the annual report, you were doing more work than 90 out of every hundred people who compete against you. Then he said he would read the finances line by line, until he was done. Now he did more work than 99 out of a hundred people. Finally, I would read each and every footnote about the company. There is not one investor in 10,000 who has done this type of work. It takes discipline, focus, desire, and a real appetite to make big sums that are only available to the truly extraordinary investor.

Recently, during that second trip around the world, Jimmy Rogers and his wife Paige Parker traveled 152,000 miles, visited 116 countries and took 3 years. Jimmy likes to get dirty and dirty when investigating. He has no interest in talking to finance ministers. I wanted to know what the guy on the street was thinking. He wanted to know if the economic situation was conducive to doing business. Was it soft or difficult?

Warren Buffett likes to say about himself that he is the best dealer (aka money manager) of capital in the world. He also said that this only works if you are in an economic environment where such skill is appreciated. If he was born in East Africa, he would have been playing drums somewhere. Bill Gates, before the age of the personal computer, would be a librarian in some isolated part of Vermont trying to live up to his father’s reputation.

All of this ties in with Jimmy Rogers, who feels compelled to understand the world first-hand before investing in it. Take Zaire in Africa, the most fertile soil on planet earth. You could practically throw seeds on the ground in Zaire and they will grow. It is incredible that with this potential, Zaire is a net food importer. Why you ask, the road system is in disarray and there is very little infrastructure. The former African colonies where the white colonialists profited from the blood of Africa have been replaced by dictatorships ruled by blacks, with the same precise lack of interest in their people that reminded us of the white colonialists.

When Jimmy Rogers travels across a country, he can deduce whether the climate is conducive to investment. If so, go for physical products. You want to own oil companies, minerals, copper, tobacco, brewery or something, anything that is tangible, that is real. This is because that country must export everything it has to begin the wealth creation process. He believes the next big bull market will be for commodities that we are already experiencing.

Jimmy Rogers is an investor who buys when there is blood in the streets, when no one else touches an investment, and he has been incredibly precise in his purchases. As a top-down investor, your bets are on countries, not individual companies as a rule. His observations are always brilliant, incisive, and to the point. He is arrogant and intolerant of small talk.

This is what he says about India as an example. You think China leaves you speechless. Indians don’t know how to do business. If an Indian visits the Taj Mahal, which is magnificent, he will be charged 20 cents to enter. An American is charged almost $ 20. The Chinese have more than 12 times the income from tourism than the Indians. Because the Chinese know how to do business and the Indians know how to screw it up. It’s this kind of thinking on Rogers’ part that makes him the MASTER investor that he is.

We are similar to Jimmy’s thinking here at in that we have a bottom-up approach to investing. We want to look at a company first, regardless of the economy and industry. Unless the company does it on its own, we have no interest. Once the company approves, we look to see if the industry or the economy can provide a tailwind in favor of the company. If so, we are on our way, because we will have great success in our hands.

We did this with Walt Disney several years ago and with Tyco more recently. Nobody wanted to own either company. With Disney, the amusement parks were empty. With Tyco there was massive corporate malfeasance that sent institutional investors scattered in the wind. Our performance history will show that we made a killing with both stocks. For further information please click here.

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