Celebrity investor and intrepid traveler, Jim Rogers has lots of reasons to be in a good mood these days. The author of best-selling travelogue Investment Biker and founder with George Soros of the Quantum Fund, Rogers has a new book out called Hot Commodities. It describes the ongoing bull market in commodities and how individual investors can take part.
Rogers, who started betting on commodities in 1998, has already benefited handsomely from making that early call in the midst of the dot-com bubble: His Rogers International Commodity Index has increased 185% since Aug. 1, 1998.
Another load off his mind: On Dec. 7, Rogers announced that he has resolved an ugly dispute with Beeland Management, the Chicago firm that markets the Rogers International Raw Materials Fund, which is based on his commodities index. Beeland manages about $500 million in assets.
"CLEARER" COMMITMENT. "I'm back in with both feet," says Rogers who had announced in October that he was breaking off with Beeland, which might no longer be able to use his name, because the firm should have disclosed errors in calculating the index. "It has been a little bit confusing to some of the investors, but the mistakes have been rectified, and everything is fine."
Rogers, who was already majority shareholder of Beeland, has increased his stake as part of the dispute's resolution. "Suffice it to say, I own lots of it," he says, although he declines to disclose his stake. "I wanted to make my commitment clearer."
Beeland countered in its own October press release that the error Rogers referred to was inconsequential and that the real dispute concerned Rogers' ownership interests in Beeland and his intention to launch competing commodities funds for investors in Japan and Europe (which he has done). Rogers now says these issues are all resolved.
CORRECTIONS COMING? A bet on commodities isn't the only one of Rogers' investment calls to prove remarkably prescient. He told BusinessWeek Online earlier this fall that he expected the dollar to decline -- just before it began a dramatic decent against the euro (see BW Online, 10/28/04, "Jim Rogers' Home Truths").
In fact, Rogers' calls have been so dead-on lately that now he thinks a short-term correction could be coming in some of the trends he has identified. A long-term bear on the U.S. dollar, he thinks the currency is due to rally in the near term. "Everyone is talking about the collapsing dollar," he says. "Whenever something has been pounded down, that's usually time for a rally," he says. However, he adds: "Long-term I expect the dollar to be seriously depressed."
Oil, he believes, is having its correction now. "Nothing goes straight up," he says. Even the bull market for U.S. stocks, which lasted from 1982 to 1999, saw many major corrections. For oil it will be the same, he says -- especially if China's economy wobbles sometime next year, as he predicts.
SELLING STOCKS. Rogers recently returned from a trip to China. Although he remains a major fan of the country's prospects, he thinks the red-hot economy will weaken sometime next year. "I'm still expecting and worried about a hard landing," he says. "Nothing I saw changed my mind about that."
What about U.S. stocks? Rogers, who has never been much of a trader, is executing his long-stated plan to sell stocks this fall and winter. "I don't think 2005 and 2006 will be good," he says. That's mainly because he expects the U.S. economy to slow next year as fiscal stimulus wanes. As the dollar declines, foreigners will stop investing in dollar-denominated securities. "The U.S. owes the world $8 trillion dollars. It's a huge international debtor, and I'm not the only one who understands that."
Next year Rogers also expects Federal Reserve Chairman Alan Greenspan to find he can no longer keep rates so low and President Bush to be unable to keep spending so high -- both factors that will slow the domestic economy.
Rogers may have a bleak outlook for the U.S., but his well-placed investments in commodities and foreign currencies are keeping him in an upbeat mood. Resolving the dispute with his business partners and seeing his new book roll of the presses are adding extra measures of holiday cheer.
For a video tour of Rogers' opulent Manhattan townhouse see "Mr. Rogers' Home" By Amey Stone