How Jim Rogers Saw 4,200% Returns In 10 Years & How You Can To

September 15, 2017

How Jim Rogers Saw 4,200% Returns In 10 Years & How You Can To

  • A person that achieves returns of 4,200% in 10 years should be listened to.
  • I’ll summarize Jim’s investing strategy into 15 rules. All of these rules are based on common sense, but are nevertheless very eye opening.
  • As for the contemporary environment, Jim is forecasting a crisis worse than 2008 due to higher debt levels. We’ll briefly discuss how to protect yourself.


Jim Rogers is an out of the box guy. What he does is often regarded as crazy by mainstream investors. Nevertheless, as we are in a crazy macroeconomic environment with unsustainable low interest rates and debt levels, looking at so called “crazy” investment alternatives might not end up being all that crazy.

I’m always looking to learn new things, looking for different investing perspectives, and in today’s article, I’ll summarize Jim’s views on investing and the current economic environment. Prepare yourself for a very interesting discussion.

To give a better overview of Jim’s investing strategies, I have summarized his views into 15 rules.

Who Is Jim Rogers?

For those who are not yet familiar with Jim, he is the guy that co-founded the Quantum fund with billionaire Gorge Soros. In the first 10 years that they worked together, the fund returned an extraordinary 4,200%. 4,200% in 10 years is an amazing performance, and I for one want to listen to what an investor that achieved 45% annually over 10 years has to say.

Since then, Jim has really enjoyed his life and gained some Guinness World Records by traveling through 116 countries in a custom-made Mercedes which shows that he wasn’t focused on accumulating wealth like Buffett or Soros still are. In 2007, he moved to Singapore because he thought it was a ground-breaking time for investment potential in Asian markets, to quote:

“If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia.”

His market forecasts have been pretty correct as in 2002, Jim accused Alan Greenspan of creating two bubbles: a housing bubble and a credit bubble. In 2008, the housing bubble burst and Jim at the time was shorting US financials, home builders, and Fannie Mae. However, he has been bearish on the U.S. stock market since the 1980s and was a commodity bull in the early 2010s which wasn’t such a great idea. Nevertheless, I still think there is a lot to learn from Jim.

In 2011, Rogers started a new index fund, The Rogers Global Resources Equity Index, that focuses on top companies in agriculture, mining, metals, and energy sectors as well as those in the alternative energy space including solar, wind, and hydro. His timing for starting a commodity fund hasn’t really been stellar but nevertheless, his long-term theories have some soundness and the fund isn’t in negative territory after 5 years even as commodities have slumped.

Figure 1: The Rogers Global Resource Equity Index TM-Core Index Fund in the last 5 years. Source: Bloomberg.

Jim’s Investing Rules & Current View On Markets

I’ve listened to a few of Jim’s interviews and have read a ton of articles, and here is the summary of his investing views combined with his views on the market:

#1 – Invest in something when people say they never want to invest in it again, when they are throwing it out the window.

Jim is very bullish on gold but has been careful not to rush into it too fast. A lot of things can happen in the next two years that could lower gold prices temporarily, if and when that happens, you should bet the farm on gold. He has a position and is ready to increase at the right price, however he predicts 2019 to be a great year for gold. The best time to invest in gold is when no one wants to touch it with a 10 foot pole.

#2 – Investing is both qualitative and quantitative.

Most of the great investors we analyze have both a qualitative and quantitative approach which means that very few practitioners think markets are efficient. Therefore, understanding how people behave is even more important than reading the numbers. Don’t forget to follow our series on behavioral finance and the first article on anchoring, if you missed it.

#3 – The more people ridicule and question you, the more likely you are probably onto a good thing no matter what it is.

Jim is famous for his contrarian and under-the-radar investments like the Danish Krone, and China way before it became a hot market. Currently, he is oriented toward markets like Vietnam or Myanmar. The point is that you have to be observant, notice the change happening, and take advantage while the investment is still cheap.

Investment advice that I often read states to avoid an investment until this or that stabilizes. The fact is that when things stabilize, the investment won’t be cheap anymore and it will be riskier because things can always change again.

As for the current environment, there is a lot of doubt surrounding U.S. agriculture and Rogers advises looking into that sector.

#4 – Don’t invest in an area just because it is depressed, find and wait for the change and invest just before it happens while still unrecognized by the market. 

A catalyst is essential for profitable contrarian investing, but others have to see it too. So, focus on finding opportunities and then carefully assess when the market recognize will them too.

#5 – Be ready to hold the cheap investments for a longer time as timing changes is very difficult but the patience usually pays off.

Jim’s advice is to look for cheap and unrecognized investments, buy them and wait, even for a few years, for them to unlock their potential as it’s extremely difficult to perfectly time investments. Nevertheless, if you find bargains, look for investments that have huge potential that can be measured in 3 or even 4-digit returns.

#6 – When you buy something cheap, even if you are wrong, you are probably not going to lose a lot of money.

I was surprised when I discovered this characteristic because I didn’t think of Jim Rogers as a value investor. However, value investing has outperform the market historically, and most successful investors use it in one form or another, be it investing for the long term or taking advantage of short term opportunities.

Back to Jim’s take on value investing, his advice is to buy an investment that is cheap and will probably appreciate with time as the valuation becomes less cheap or the company grows.

#7 – Global capital flows are shifting, adjust accordingly.

Jim is a total Asia bull. I’ve described the long-term productivity trends in one of our articles about Asia, so feel free to take a look as the perspective is similar to Jim’s. Jim’s view is that Asia has the money, energy, ambition, drive, and the brains. Don’t forget that for a big part of history, up to the 19th century, Asia was creating the biggest part of the global GDP.

#8 – Pick any year in history. What everyone believed that year is no longer relevant 15 years later.

When I heard the sentence above, it really blew my mind. 99% of what you hear and read about investing is focused on the short term but it’s unbelievable how things change in 15 years.

15 years ago, in 2002, the FED’s balance sheet was just a fifth of what it is currently, gold prices were also about a fifth of the current price, China and Asia weren’t yet significant players, and all the talk was around the just-ended recession and dotcom bubble bursting.

If we go back another 15 years, we are in 1987 when the FED’s interest rate was at 7.7%, an unimaginable number now, and the stock market was about to crash 20% in just one day in October 1987. Another 15 years back, the world was about to enter the 1970s oil crisis, the dollar was just decoupled from gold, and the war in Vietnam was still going on. All of these things are completely irrelevant to investing now.

#9 – We’ve had economic problems every 5 to 10 years since the beginning of time, no matter what people say.

This means we should always expect change in the investing world and be prepared for anything. Expecting the world to continue as is usually leads straight to investment losses, so don’t be surprised by the next shock to the economy and financial markets.

#10 – Central banks will always fail to control whatever they try to control.

Central banks always try to artificially maintain stability which is impossible to do over the long term as sooner or later, reality takes over. So the smart investor should always bet against central banks and their artificial stability. In the current environment, this means we should bet against the Bank of Japan, the ECB, the FED and their low interest rates, low inflation, and easy money. Just think of the 20% overnight surge in the CHF when the Swiss National Bank unexpectedly abandoned its cap on the CHF’s value versus the EUR in 2015.

#11 – Learn the Chinese word “Weiji” which means both disaster and opportunity.

For investors, this means that there where there is a disaster, you should also look for investing opportunities. The 2008 financial crisis was a disaster, but those who invested back then are now enjoying incredible returns.

#12 – Do nothing most of the time.

This might be surprising, but it’s a very straightforward message. If you don’t see money lying on the street, don’t do anything. Chasing returns will usually lead to high risk and low returns.

Invest only when you think something is a sure thing. This way, the risk is minimal while the returns are great. To reach great investment returns, you need to buy something only on rare occasions when you find low risk bargains. The rest of the time, it’s better to do nothing.

This is also an advantage the do-it-yourself investor has over professional money managers. A professional is paid to do something and if he doesn’t, he is most usually sacked. As an individual investor, you have the luxury of time and choice at your side, use it wisely.

#13 – Cash is the perfect hedge.

To take advantage of the few real opportunities you will stumble upon in life, it’s essential that you have cash. Therefore, cash is the perfect hedge.

#14 – It is easier to figure out commodities than it is to figure out stocks.

All you have to ask yourself about commodities is whether there is too much or too little of it, nothing else. As for stocks, there are thousands of factors impacting the business, and valuations depend on what the FED is going to do. Why go into a complicated environment when you can keep things simple?

#15 – Don’t listen to investment gurus or even to Jim Rogers himself, do what you know.

This is in line with Buffett’s advice to always stay in one’s circle of competence. As years go by, you will slowly enlarge that circle of competence but it’s very risky to wander out of that circle without sufficient knowledge despite the attractiveness of some investment opportunities.

Jim Forecasts The Worst Market Crash In History

The above rules are an excellent example of pure common sense, which is all you need to be a successful investor.

On a more contemporary note, Jim Rogers forecasts a market crash even worse than the one in 2008 as the current debt is much higher than in was back then and it’s normal for an economy to enter a recession every 4 to 8 years. As for the timing, Jim is very sincere and simply says that he doesn’t know when it will happen.

His protection advice is pretty simple: Invest in what you know best and that will protect you from anything. What he knows is agriculture, gold, and, of course, cash. As for gold, it is going to be gigantic in the future but could go down before that happens.

I’m definitely going to dig deeper into this agriculture investing idea, so keep reading Investiv Daily to be up to date on low risk, high reward investing opportunities in the sector.