Making money in any kind of financial market, whether it deals in commodities, stocks, bonds or currency, is a task that demands all-round awareness - of politics, finance, corporate performance, economies and so on. It also requires the ability to predict trends and speculate about the future of a particular asset class. It is a risky business, to be sure, and one that calls for caution. No one understands this better than the legendary trader Jim Rogers.
The book is an autobiography-cum-investment guide based on anecdotes from the author's life and his experiences on the trading floor. It starts with an account of his childhood adventures. It then talks about how he went to Yale and Oxford, and finally ended up on Wall Street.
Despite all his adventures, Mr Rogers' advice is conservative: even as he highlights the basics of investing, he firmly believes in the virtues of deep research and foresight. He suggests that anyone who does not know how to invest should stay away and focus on fixed-income funds instead - such funds may carry a lower interest rate, but at least the returns are guaranteed.
In the early years of his career on Wall Street, in the unstable '70s, a young and enthusiastic Rogers worked day in and day out just to stay ahead. He researched everything and ignored all rumours. This paid dividends in terms of wealth creation, but also cost him - not unsurprisingly - several marriages.
Later, he joined the New York-based investment bank Bleichroeder, where he worked with George Soros. The two men, who went on to become stalwarts of the financial world, created the storied Quantum Fund, which famously bought and sold bonds, stocks and commodities from across the world, thereby exploiting untapped markets. The Quantum Fund was the basis of the serious wealth that Mr Soros and Mr Rogers started accumulating, which allowed the latter to retire in his 30s.
Mr Rogers has nothing but praise for Mr Soros' trading sense and market timing. But he is less enamoured of his values. There is a detailed account in the book about Mr Soros' attempts to cover up a bad trade, which became a source of bitterness between the two.
One of the most interesting anecdotes in the book is that Mr Rogers agreed to teach at Columbia Business School in return for lifetime access to the gym. His teaching methods were unorthodox, to say the least. Instead of lecturing, he asked his students to pick industrial sectors and companies to research and then graded them on the basis of his discussions with them and how the stocks they picked had performed. He was considered a hard taskmaster, but was pleasantly surprised to discover that students appreciated his methods.
Like many traders who have seen Wall Street up close and personal, Mr Rogers is unrelentingly critical of American financial and economic policy. The US is the largest debtor nation in the world, he says, and could plausibly be headed for bankruptcy in the near future. He also points out that the American lifestyle induced people to spend more and save less, which has been the country's fundamental weakness.
The point of printing money and infusing it into the financial system (what is popularly known as "quantitative easing") is one example of the rot in the US economic and financial system, he adds, and blames it on the incompetence of politicians and bureaucrats. His deep belief in this systemic incompetence, by the way, was also an opportunity for him to make money in the 2008 economic collapse, when the housing bubble burst. He had taken short positions in banks that were affected the most, such as Citibank and Fannie Mae, and companies that were involved in the business of building houses.
In contrast, the author is deeply impressed with the rise of Asia as the emerging powerhouse in the world of finance, especially the progress of China as a superpower and the way Singapore has emerged as a global trading hub. His views on Korea and Myanmar are worth reading. He thinks a united Korea (North Korea and South Korea) would be one of the most lucrative investment options right now. If the two countries do unite eventually, they will provide tough competition to Japan and China, he predicts.
On Myanmar, he says the country is also a good investing option since it needs to build everything from scratch and also because it is rich in minerals.
All in all, this book is an entertaining read. Mr Rogers has a knack for telling it like it is. The anecdotal approach to investing makes the concept more accessible to those who do not follow the intricacies of the markets. And, anyway, it's always better to read about someone who has been there and done that.
STREET SMARTS: ADVENTURES ON THE ROAD AND IN THE MARKETS
Jim Rogers
Crown Business; 272 pages
