Wealth Building Lessons

Legendary investor Jim Rogers has been bullish on commodities since 1999. He started out bullish on oil and metals and to a certain extent on soft commodities like orange juice, coffee and grains.

Here’s a great 10 minute video on his current economic views and what he’s investing in right now.

As always, he calls Ben Bernanke a clueless moron and has a great explanation for why lowering the interest rates is bad for the US economy. That’s always entertaining.

He thinks we might fall into the same trap as Japan and see 17 years of stagnant GDP. That’s downright depressing.

But he also lets us see what sectors he’s investing in right now and that’s really informative. Unfortunately he doesn’t name specific companies or ETFs so we have to make an educated guess regarding the investments.

He thinks the US recession will affect global economies, unless of course they’re related to water treatment and transportation. Powershares Water Resources Portfolio (PHO) is an ETF that comes to mind.

He’s also long foreign currencies like the Chinese remnimbi, the Japanese yen and the Swiss franc and short the US dollar, which is not anything we didn’t already know. Apparently, there’s no love for my Australian dollars! Some foreign currencies can be easily bought via Currencyshares ETF, like FXY for yen and FXS for Swiss francs. However the remnimbi isn’t that easy, but it isn’t too difficult either. You just need to open an account with Everbank and then convert the money into remnimbi, or any other currency you like.

Rogers is also short the Investment Banks and financials like Fannie Mae. The easiest way to short the financials is by buying Proshares Ultrashort Financials ETF (SKF).

He also recommends adopting China’s policy of buying real assets and owning commodity companies like RIO and BHP. He wouldn’t say whether he already owned oil (or oil-related stocks), but just that he wouldn’t be a buyer of the commodity at these prices. Thats not to say he doesn’t already own Harvest Natural Resources (HNR) or PetroBraz(PBR). After all, he did say that he’s well diversified across the globe.

Another thing he mentioned fleetingly was investing in grains. I’ve been wondering how to invest in this sector without buying futures contracts. It turns out that there are several ETFs that are geared towards these soft commodities and there composition:

Greenhaven Commodity (GCC): 18% energy, 18% grains, 12% livestock, 24% metals, 29% softs

PowerShares Agriculture (DBA) : 30% soy, 28% wheat, 23% corn, 16% sugar

Van Eck Agribusiness (MOO) : 8% Monsanto, 8% Mosaic, 8% Komatsu, 8% Potash Corp.

PowerShares Commodity (DBC) : 33% crude oil, 20% heating oil, 14% wheat, 11% aluminum, 10% corn, 10% gold

iPath Ag Total Return (JJA) : 31% soy, 20% wheat, 16% corn, 11% soy oil, 9% cotton, 8% coffee, 7% sugar

Thanks to Matt Badiali for this list.

Its not easy to get a billionaire to invest your money. But with a little research, you too can now invest like a billionaire!

Happy investing!

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