Jim Rogers Investment Strategy explained by himself 22 july

Jim Rogers Invest where demand is low

Investment guru Jim Rogers, co-founder of the Quantum Fund in the 1980'sexplains in details his investment strategy , Jim Rogers has long been predicting the downturn in the market we're now seeing. But he admits even he didn't think it would come as quickly and furiously as it did after the fall of Lehman Brothers last September.

Q: The way your method works is. You look at the dustbins; you look where people are bearish because that is where you find the bargains?

A: Frequently, I do try to find things that are cheap. Normally if something is cheap, it is because it is in the dustbin; people are not looking at it. If everybody is looking at something or if everybody is investing in something, you know as well as I do, it is not cheap.

Q: More certainty equals less profit?

A: Exactly.

Q: A good lesson in investing is learning the laws of supply and demand. Can you explain that to us?

A: It is very simple. I came to the conclusion at the end of the 90s that the commodities had been in a bear market for about 20 years because there had been excess supply in the 70s, people found oil and a lot of things happened, huge inventories of food buildup. But then by the end of the 90s, I came to the conclusion that nobody built a drilling rig for 20 years and nobody had been discovering oil, farming had been a terrible business, farmers were going bankrupt all over the world. So, I realised that is going to mean there is less supply.

I had driven around the world a couple of times as you know, and I could see that demand was booming. I mean Asia was exploding. The difference in Asia in 1998 and in 1978 was very dramatic. So, I could see that demand was going up for 20 years, and supply going down and that had to mean that the bear market in commodities was going to come to an end. So, I started buying commodities for the first time in the last 15-20 years at that time. Lo and behold, I got it right. Sometimes I get it right.

Q: That works every time, the law of supply and demand. No dictator, no monetary authority has ever been able to change that?

A: They all try. Not just dictators, democracies try. I mean the Indian government, the American government. They all try to abolish the laws of supply and demand, think that they are smarter than anybody else. Periodically, governments put price controls on to food. Recently, the Filipinos put price controls on rice. Now if you were a farmer, you are not going to go into the field over 12 hours a day in the hot sun to raise rice if the government says you can only sell it for 2 pesos. You are just not going to do it.