April 21, 2005

Welcome to the ninth edition of Fast Break "Ask an Expert." Today's market expert is Jim Rogers.

Jim Rogers is the author of Investment Biker (Random House 1994), Adventure Capitalist (Random House 2003) and Hot Commodities (Random House 2005). [more]

*Note: All ideas, expressions and recommendations outlined herein are solely the position of the author and not that of Fast Break, FutureSource.com or any related company.  Please keep in mind that Jim Rogers is primarily a fundamental trader, therefore, his answers may not always align with a technical analysis viewpoint.

JSG from NY writes
Do you believe "cost push inflation" is currently affecting consumer buying and outlook and business costs AND do you believe the "core rate" of inflation is an "accurate" measure of inflation.
  
The government might be misleading consumers. I constantly get letters from people complaining that prices are up despite what the government says. Look at dozens of items in your own life and you will know what is really happening. The rising costs are certainly hurting everyone and are contributing to the economic slowdown.

I ignore the "core rate" as do most people except perhaps CNBC and the stockbrokers. It is balderdash.     

Hora from Florida writes
1.Crude oil is correcting down, what is the price that you will get long approximately cash price and time frame. 2.What are the commodities that you will hold long at the present time?

I only own my Commodity Index fund at the moment lest someone say I am trying to profit in the commodity markets from my book.

I'd certainly have to buy crude IF something knocked it down to the low 30s say, but that is not a prediction.

Gilbert from Bonita, California writes
A few months ago I enjoyed reading your book on Hot Commodities. Is there anything new that you would add?

Keep doing your homework because there are going to be fortunes made there over the next decade or so. Watch for any problems in China because they will create buying opportunities if they come.

Wayne from Rome, NY writes
Many articles have been written about a possible short squeeze on silver. May I have your opinion on these articles and your thoughts on silver as a possible investment?

It is an old, old story from those who have been Long and Wrong for years. I own a bit of silver, but expect to make more in many other commodities because the supply/demand fundamentals in silver are not as good as in the others.

Phillip from Norman, OK writes
After reading your book, Hot Commodities, I understand you are highly bullish on commodities for the next decade at least. What types of overwhelming world events or environments would need to develop for you to change your outlook?

I guess if someone discovered a gigantic oil field in Chicago or Berlin or Tokyo. That would be significant. The bull market in commodities may go on for several more years as I explain in my book although there will be big consolidations along the way as there always have been in every bull market in history.

Sylvia from Los Angeles writes
What do you use for risk control?

I have no specific system. I just keep reexamining and rechecking when things go wrong. I some times just panic and throw in the towel like everyone else in the world. Those times are usually when I should be doing exactly the opposite [which I am still learning].

JB from California writes
From a technical standpoint, Sugar doesn't look so good right now. I know you use a more fundamental approach to investing---at what price would you say Sugar has pulled back enough to consider adding to your position?

I am not a technician so I cannot help. I have no positions in individual commodities these days lest someone accuse me of trying to use my book to profit in the markets. I do own my Commodity Index fund.

Joe Anthony from UK writes
I have read your recent book with interest and note that you are a well-regarded Fundamentals trader. I trade TA using a Fibonacci derived system (not simple Fib but multiple Fib calcs) with success in all markets from currencies to commodities and individuals shares to indices. I wondered if you have ever used TA as part of your investment process and if not why not?

I do not use it nor even know what it is. I buy and sell things based on what I hope are sound fundamentals.

If something works for someone, I always urge them to keep at it no matter what the method.

Ray from Florida writes
I invest in oil and gas. Last week, Goldman Sachs put out a paper forecasting $105 oil within a year. The latest Forbes magazine forecast $30 - $35 oil within a year. What is your take?

I would be surprised to see crude at $105 within a year. I would not be surprised to see crude at $35 if something happens in the short term like a hard landing in Chinese real estate. IF it hits $35 for some reason, buy all you can. [Neither price is a prediction from me.]

Having said that, the surprise in the market will be how high crude oil stays and goes over the next few years. Crude will certainly top $105 and higher within a few years.

Michael from Ireland writes
How can I get GOLD or OIL without digging for it with pick and shovel??? (And other quality commodities???)

There are many, many banks and dealers all over the world who will sell you gold. Or you can buy futures and take delivery when the contracts mature.

You can also take delivery of oil in the same way, but you need to arrange storage. Just ask the Exchange and/or a broker. Most oil companies will deliver all the oil you want if you organize it.

*Note: All ideas, expressions and recommendations outlined herein are solely the position of the author and not that of FastBreak, FutureSource.com or any related company. Please keep in mind that Jim Rogers is primarily a fundamental trader, therefore, his answers may not always align with a technical analysis viewpoint.

Jim Rogers is the author of Investment Biker (Random House 1994), Adventure Capitalist (Random House 2003) and Hot Commodities (Random House 2005).

Born in 1942, Jim Rogers had his first job at age five, picking up bottles at baseball games. Winning a scholarship to Yale, Rogers was coxswain. Upon graduation, he attended Balliol College at Oxford where became an Oxford Blue. After a stint in the army, he began work on Wall Street. He co-founded the Quantum Fund, a global investment partnership. After 10 profitable years when the portfolio gained 4,200% while the S&P rose less than 50%, he decided to retire, at the age of 37, but wouldn't remain idle.

Continuing to manage his own portfolio, Rogers served as a professor of finance at Columbia University Graduate School of Business and was a regular media commentator. At the same time he laid the groundwork for his lifelong dream, an around-the-world motorcycle trip: more than 100,000 miles across six continents. That journey became the subject of Rogers' first book, Investment Biker.

Having returned to New York after his second record setting trip of 152,000 miles, this time in a custom-made Mercedes Benz (chronicled in Rogers' second book, Adventure Capitalist), he continues to comment in the media on financial topics, while he and his wife enjoy the pleasures of parenthood. His third book, Hot Commodities, was published early in 2005 and immediately made most of the bestseller lists.