Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market

Jim Rogers once again does the reading public a service with the publication of "Hot Commodities". Rogers is an excellent antidote to the spate of "invest a few hundred a month into an S & P Index fund and retire a millionaire" books. Rogers cogently argues that stocks (especially U.S. equities) will either decline or fail to appreciate in the coming years and that tangible goods like crude oil, soybeans, copper (and many others) will become valuable. Rogers's reasoning is simple: because commodities were so plentiful/cheap for so many years, most of the marginal producers of those goods failed or changed businesses. Now that countries like India and China are growing, demand is increasing faster than the ability of the marketplace to meet that demand. As any self-respecting economist can explain, that means a rise in values, and profits for those who are long commodities. I should point out that Rogers is solely a fundamentalist; there are no moving averages, MACD histograms, or other technical analysis graphs in the book. Also, Rogers is an investor, looking ahead not weeks or months but years. My only complaint about the book is that Rogers is somewhat nebulous about the best way to profit from the burgeoning commodities market, but a lot of that is because of the nature of commodities contracts. Unless you have a warehouse in your backyard, you are not going to purchase and store any of the commodities mentioned. Unfortunately, you cannot buy a commodities contract and hold it indefinitely like a stock. Rogers has his own index fund based upon the Rogers Raw Materials Index ("RICI"). Although he mentions RICI frequently in the book, "Hot Commodities" stands alone and is not a sales brochure for Rogers's fund. Read it!

I thoroughly enjoyed Jim Rogers's new book "Hot Commodities." Having read his two previous books, "Investment Biker" and "Adventure Capitalist," better prepared me to appreciate his newest book. If you are looking for technical analysis, this isn't the book for you. You best look elsewhere. From his two prior books, we know that Jim looks at the bigger picture. He always likes to be a contrarian and views opportunities from a different vistas. In this book, it's no different. He dispels the notion that commodities are any more risky than equities. After having accomplished that feat, he then goes on to describe a few of his favored commodities. He walks through his logic in his somewhat folksy style. He doesn't bore you with mountains of data and information. Instead, he shows you what he looks at and how he arrives at his conclusions. In essence, he teaches you how to fish. Now knowing how to fish, you can choose your own favorite commodities and begin researching those commodities. You'll note that most of his sources of information are readily accessible to the general population. He didn't rely on proprietary Bloomberg information. Instead, most came from common sources such as Barron's. Jim also tried to instill in the reader a fascination with commodities. Once you follow commodities more closely, you'll have a better appreciation for investing and following world events. When you have your cereal in the morning, how is the price of commodities affecting the profits of Kellogg? How does the weather in Florida affect the price of your orange juice, or developments in Brazil affecting the price of your cup of joe? How do various political and other developments affect commodities, and how do those changes in commodities affect us? I thoroughly enjoyed his latest book because a) it gave me his view on commodities and why he expects commodities to remain strong for an extended period, b) because it complemented his two previous books by showing us how international factors relate to commodities, and c) because his book will make me an overall better investor. Great book! I encourage you to purchase all Jim's books.

A new bull commodity market is emerging. The twentieth century saw three long commodities bulls (1906-1923, 1933-1953, and 1968-1982), each lasting an average of 17 years. Price is a function of supply-and-demand, as supplies are plentiful prices remain low; as supplies become scarce prices will rise. An investor, who realizes when a supply and demand imbalance is occurring and invests, will make money. Good investment is looking for opportunities and buying cheap then holding long term for significant profits. Stocks are over priced with excessively high P/E ratios. Can soars continue to soar higher? When commodity prices go up stock prices go down, the cost of doing business. Bonds yields are weak as lower interest rates have drove down yields. Real Estate is an investment bubble waiting to be burst with a possible resulting loss of wealth ranging between $2 to $3 trillion. Prices are too high for investors to make money. Currencies values are a function of national debt. The U.S is the largest debtor with $8 trillion dollars of international IOUs. For the last 20 years, the U.S has been borrowing in world financial markets because of large trade deficits and the continual borrowing has drove down the value of the dollar. Increased government spending and the Feds printing of money have created a devalued dollar and reduced foreign investment; in a 12 month period between June 2003 and June 2004 foreign investment went a negative $155 billion). The weaker dollar makes commodities seem more expensive, as in the case of oil; between 2002 and 2004 crude oil prices rose 64 percent in dollar and 16 percent in euros with the dollar losing 40 percent against the euro in the same time period. The strength or weakness of the dollar has nothing to do with the price of the commodity. Commodity price is driven by increasing demand resulting in shortage or perceived shortage. "Commodities are so pervasive that, in my view, you really cannot be a successful investor in stocks, bonds, or currencies without understanding them." Investing in commodities can be a hedge against a bear market, rampant inflation, and a major downturn in the economy. One reason in the 1980s and 1990s companies and stocks did so well was raw materials were in a bear market and investors realized in the late 1990s the commodity bear market was ending and the stock bull market was coming to an ending, also. The bear commodity market came to an end in 1998 reaching a 20 year low. The cost of doing business was eating away profits taking drive for growth away from companies. Millions of investors listening to experts advocating the new economy were financially hammer and are still trying to break even. Why buy commodities now? The current supply-and-demand balance for commodities worldwide is out whack. Time will turn any oversupply of a commodity into an empty warehouse unless its inventory is replenished. Demand for supplies increased and years of ch

I have followed Jim Rogers for over ten years. Although I have learned from him through watching him on television, reading his articles, and reading his first two books over that time, I have always hoped that he would write a book solely on investing that would give other people the chance to learn how he approaches investment decisions. Hot Commodities is it! If there is one thing that I have learned since I have followed the financial markets, it is that there are tons of people on TV that SOUND like they know what they are talking about, but there are very few people who make investment predictions that consistently come true. Take my word, Jim Rogers is the person you should listen to if you want to make money in the financial markets. If you want hard data to back that up, just do some research on the Quantum Fund that he and George Soros ran in the 1970s. It went up 4000% in value in the 1970s when equities were going down! In addition to reading Hot Commodities and his other two books, check out his web site since he has numerous articles there. And also be sure to watch him every Saturday morning on FoxNews. The bottom line is that if you learn how he thinks, you will be able to make sound investment decisions for yourself for the rest of your life.

Jim Rogers wrote a very easy to read book. If you are looking for hot tips as to what commodity to invest in do not waste your money buying this book. He does not offer any "hot" tips. I personally believe if any one person had "hot" tips to make tons of money, why would they tell other people? It does not make sense. Anyhow this book does not have any formulas, and actually the author points out that most technical analysis traders loose money, it is the people who write the book on technical analysis that make money. The book however is well written, and makes basic arguements based on facts, namely suppy and demand. Jim Rogers as you can tell from his book is a fundamentalist. His arguements are clear and concise, and make perfect sense. You will not be disappointed in this book, and even if you are technical trader, you could still use many concepts in this book to help with your trading, or if you just want some information on the fundamental side. This is one of the best books I have bought in a long time. It will sit with my arsenal of other books, so that I can use this to help make better judgements into what commodities to invest into. He also makes some nice parallels with the stock market and commodities market. You will not be disappointed, and the price is not bad at all.