Jim Rogers’ connections with George Soros and his new bet
Jim Rogers, the legendary investor first went to work on Wall Street with $600 in his pocket in the late ‘60s. In 1970, he and George Soros founded the Quantum fund: one of the greatest investment funds in history. Between 1970 and 1980, the Quantum fund returned 3,365%, outperforming the S&P 500’s performance of 47% by an enormous margin. On an annual basis, Rogers and Soros produced average returns of 38%. Rogers then “retired” with millions in his bank account at the ripe age of 37.
Since then, he’s taken two trips around the world, the first on a motorcycle, the second in a custom-made Mercedes. Still managing his own money, Rogers has used his “on the ground” knowledge of foreign markets to make numerous major calls. He went long stocks in 1982 when everyone was still bearish. Stocks more than tripled in the five years following this. He also went short before the market crash in 1987.
However, his most famous call was the commodities bull market that began in 1999. At that time, everyone thought he’d lost his mind. Commodities had done nothing in 15 years. The Dow Jones Commodities Index hadn’t been revised since the 1960s. and Reuters’ hadn’t revised its commodity index since the 1930s. With no decent options available, Rogers decided to launch his own commodities index. He did so in August 1, 1998. He then took off on his second world trip as chronicled in Adventure Capitalist. Since that time, the Rogers International Commodities Index has risen 164%. In contrast, the S&P 500 is DOWN 30%.
Historically commodities have always done well during periods of high inflation. And Jim, like myself, believes the Feds’ moves are highly inflationary. Jim said in video to CNBC, "We’re setting the stage for when we come out of this of a massive inflation Armageddon," Jim has publicly stated that he is looking to get all of his money out of the dollar in the coming months. He’s also continually buying more commodities. And one segment in particular interests him is agricultural commodities. It’s not difficult to see why. You only make big money by buying investments that have been ignored for years. And few investment classes are as unpopular as agricultural commodities (when was the last time someone you knew opened a sugar plantation or soy bean farm?)
It’s not mere anecdotal evidence either. Inventories for corn, wheat, and soybean are all near 40-year lows. Other soft commodities like cotton, sugar and coffee are at historically low inventories too. So there’s very limited supply. And it’s only going to go lower.
The credit crisis has made it a lot more difficult for farmers to get access to credit for fertilizer. And low commodity prices have made it no longer economical to grow certain crops (I personally know of a large farm that will not be planting any corn this year for the first time in 60 years).
Best of all, Jim’s set up the perfect agricultural investment for us: the ELEMENTS Rogers International Commodity Agriculture ETN (RJA). RJA tracks the movements of the agriculture portion of Jim Rogers’ commodity index. As such, it gives broad exposure to a large basket of agricultural commodities including soybeans, oats, sugar, orange juice, coffee, cattle, etc as shown in the chart.