By Paul Lamb If you were an investor and become a millionaire or even a billionaire by the age of 37, what would you do? Would you take care of friends and family, and chase your dream of being famous? Would there be art collecting and land opportunities for you? Right now, in your head, are you considering the possibilities of kicking your heels up, relaxing in your new mansion while looking ahead to a future of recreation and fun? Maybe you go the other direction. Resting with riches might be as lifeless as a phone booth.
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Shelves: nonfiction When a guy accumulates hundreds of millions of dollars, Ill listen to him. Jim Rogers is one such guy. He does not reveal his net worth in this book. He uses some of that money to amass an impressive bowtie collection that he peacocks on various business television shows.
Describing a charmed life can sound like bragging. Here, Rogers recites his impressive experiences. More interesting to me, however, is the peak into his thought process and approach to life that this book supplies. He made his money by investing it. His secret lies in a desire to learn combined with confidence in his own beliefs.
Jim Rogers was born in and raised in a small town in Alabama. The eldest of five boys, he has a natural curiosity for the workings of the world. He joined the Key Club in high school, which helped land him a scholarship to Yale.
While at Oxford, he was the coxswain the steersman at the front who directs the rowers for The Boat Race an annual crew race between Oxford and Cambridge held on the River Thames in London. Fear and curiosity propelled him to succeed. He spent long hours learning in school and on Wall Street. He had no interest in business school, believing it to be a waste of time. He learned more on a trading desk in one summer than he would have learned in two years at business school. He was drafted into the army from to He marched on the Pentagon in to protest the war.
He and George Soros worked at the investment bank Arnhold and S. Bleichroder before together founding Quantum Fund, a hedge fund. He loved his work. Rogers does not provide many specifics about his investments. He says that Wall Street will pay you to explore and know the world because everything is connected. An uprising in Chile, for example, will impact the world prices of whatever commodities Chile exports. He used his knowledge of history, politics, and economics to invest.
He focused on commodities later, in the s, he started a commodities index and short selling. He frequently took contrary positions to the rest of the market. After going broke early in his career on short positions, a decade of successful investing followed. Rogers had enough money to retire forever at the age of He used his retirement to teach some business classes at Colombia for fun. The school compensated him with a lifetime membership to its gym.
It later offered him a full professorship, but he turned it down. He believes one can obtain education more efficiently and cheaply elsewhere. His education continued during retirement in the form of travel. He traveled the world on two different occasions: once by motorcycle around for two years and once by car around for three years. He visited approximately countries on each trip.
The trips provided opportunities for both business and pleasure. Visiting countries, meeting the people, and examining their markets and, in particular, their black markets is partly how he developed investment strategies.
It is from these travels that he rejects the efficacy of lumping Brazil, Russia, India, and China together for investment analysis. They have different resources, people, culture, economies, and red tape. He is also long Myanmar.
In fact, he thinks Myanmar is the best investment opportunity he knows of right now. It has 60 million people, many natural resources, a highly educated and dedicated workforce, and it is nestled between India and China. While wealthy, Rogers had two divorces that go largely undiscussed. He was evidently too young and too committed to his work for his first two marriages to succeed.
He remarried a third time, and is still married today. He and his third wife have two daughters. They moved to Singapore because Rogers believes Asia is the economic powerhouse of the future while the US will stagnate and decline. Rogers does not speak any languages other than English, and he wanted his young daughters to learn Mandarin.
Increasing his fortune is not a priority; it could actually make life harder for his daughters if they became complacent because of it. He wants his daughters to reach their full potential.
He believes they can do that in Singapore. Based on our respective net worths, Rogers knows much more about the world than I do. And I agree with nearly everything he writes in this book. Accordingly, I should probably move to Singapore or China and ride the shifting tides. But inertia is hard to overcome. These changes are: 1. Bring all US troops home from overseas.
Stop policing the world. Litigation reform such as a loser pays system. Education reform — no policy recommendations given. Replace income and savings tax with a consumption tax. Require federal legislators to govern from home rather than Washington DC.
Voting for bills would be done online from stadiums or arenas while constituents watched. Perhaps select citizens in a controlled, random manner and draft them for limited terms to serve in Congress. It would be like jury duty but for legislatures. Rogers is right. America should make these changes. I have not. Come down here and sell soybeans short, once, and you will learn more about markets than you will wasting two years with them.
But empires always overreach. They always overspend. And in , the British Empire was already corroding from within. It adds liquidity as well as stability. The market needs both buyers and sellers. Without sellers, prices can skyrocket; without buyers, prices collapse. Suppose everybody, caught up in the dot-com mania, wants to buy a stock like Cisco. The stock goes from 20 to The short sellers start coming in. The stock might then go Without short sellers, it would go to Without short sellers, there would be no sellers at all—there would be no liquidity, things would go nuts.
Short sellers temper the mania. Let us say the short sellers are wrong. They have to cover their shorts, and they are summarily forced out of the market. And the stock goes to where it would have gone anyway. But suppose the short sellers are right—and, by the way, short sellers have a better record than most on Wall Street—and the stock starts heading toward a collapse.
Everyone is in a panic, begging to get out. Everyone is screaming to sell. But with the stock crashing, there are no buyers. Well there is one group of buyers, actually: the short sellers. They have to buy back the stock.
They have to replace the stock they borrowed. They have to cover their shorts. So in the collapse, the stock does not drop as much as it might have. A stock that might have gone down to 3 goes down only to, say, 8. So short sellers are good for the market.
They have saved you from buying the failed stock at —if you bought at the top, you bought at 90, instead—and when you dump, thanks to the short seller, you will be able to get out at 8 rather than 3.
Street Smarts: Adventures on the Road and in the Markets