[.ca] Hot Commodities: How Anyone Can Invest Profitably in the ... (ISBN 140006337X)

Coffee Futures Reached Five Year Highs and Oil Spiked Today:
We are accustomed to reading headlines like the above in The Wall Street Journal and in the business sections of other publications. If you are like most people, you use the information to get a general sense of what future inflation might be . . . and go back to buying and selling stocks and bonds. Jim Rogers has a different suggestion for you. Learn enough about the commodity markets so that you can consider whether they offer an appropriate alternative for investing some of your funds. His book, Hot Commodities, is designed to help you achieve that goal. I found Hot Commodities to be an easy-to-understand introduction to the subject that will appeal most to those who know nothing. If you were alive during the commodity-driven inflation of the 1970s and 1980s, you will find this book to be a little too simple for you. But you will probably enjoy the book, nevertheless. Mr. Rogers has a straightforward, humble approach to his writing that will appeal to most. Some may avoid this book because they don't want to use the tremendous margin that is available with commodities. That's a mistake. Mr. Rogers is suggesting a plain vanilla index-fund approach to owning a portfolio of commodities over the long term with no trading and no financial leverage. His point: During a commodity up-cycle, many commodities will rise by ten-fold. Hitting most of the rise over a 10-18 year period will provide returns that exceed what bonds and stocks usually provide. In addition, he shows that commodities tend to be countercyclical to stock and bond returns so commodities can be a useful diversification for part of a portfolio. Interestingly, commodities have also been less volatile than stocks in the last 25 years or so. Mr. Rogers also gives you basic information in case you want to consider more adventuresome versions of what he recommends (don't do it!). The most interesting parts of the book are the ones where he explores the pivotal role that China and Brazil play in creating a commodities boom. He looks at economic growth in developing countries, oil, gold, lead, sugar and coffee in a little detail to give you a flavor of how to analyze supply and demand fundamentals for a given commodity. Personally, I would have found the book to be a lot more valuable if it had had more detailed analysis in it . . . and suggestions for how to do your own homework. But that's okay. I still learned from the book, and intend to consider doing some commodity index fund investing. I recommend this book to anyone who wants to use index fund investing to beat the pros.

Good, but where's the social conscience?:
Jim Rogers' "Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market" provides a good overview of why and how commodities outperform and are considerably less risky than equities over the long-term. In essence, unlike equities which can plummet to values of less than zero, futures contracts will always maintain a certain inherent value. Also, given the fact that the discovery is rare and the extraction process is difficult, commodities tend to have longer bull runs. While profiting from futures trading requires a basic knowledge of basic supply and demand economics, world politics and even meteorology, Rogers provides a few key examples of rising powers in China, India and Brazil and how these affecting the exchange rates of a number of commodities. Indeed, Rogers' analysis of oil, gold, lead, sugar and coffee are quite insightful. The tendency of OPEC countries to over-inflate their petroleum reserves means that the "End of Cheap Oil" is certainly a modern reality. While gold is "sexier" than most other commodities, Rogers is somewhat hesitant about it. In spite of the fact that humans have long recognized the potential dangers associated with lead, a larger number of automobiles in China means that more lead-acid batteries will be required. Increased need for alternatives to traditional oil will undoubtedly signify new highs in the prices of sugar. Finally, Rogers teachers us that coffee is largely an American drink, but the "Westernization" of China has brought greater interest in consumption. In spite of the interesting analysis, Rogers evidently has a few flaws. First, he fails to elaborate on potential firms with which to trade, given that many large banking institutions (particularly in Canada), may opt out of commodities trading because of the complexity of such transactions. Also, financial institutions may charge high transaction costs for the so-called complex transactions, so strategies to minimize fees would have been useful. Rogers also reduces commodities to a purely economic view and demonstrates no social conscience. He fails to see the social ills of exploiting resource-rich developing countries or the hardships of the average farmer, who has likely sold off his self-sustaining farm to a large sugar cultivator and is now just seen as "cheap labour" (p.183). Moreover, he does not elaborate on the nutrient drain associated with monocultures or the lack of feasibility to turn "green" biofuel into ethanol, due to the large quantities of arable land required. Finally, Rogers fails to elaborate on how fair trade products (like coffee and cocoa) have impacted the prices of standard commodities. All in all, Rogers does provide a good overview of often overlooked commodities and is confident that the next great bull will be in commodities. However, his purely economical views seem like a bit of an inconclusive view of the commodities market and he fails to provide ideas as to how, where and at what cost commodities should be purchased.

good personal story but not far-reaching:
Jim is doing it again and it is a very good story, but on the larger issues, Jim is less than far-reaching. By this, I mean the surge in China and India. For a far more insightful book, I recommend: China's global reach: markets, multinationals, and globalization by a Chinese consultant George Zhibin Gu: China's global reach: markets, multinationals, and globalization, which offers sweeping views on current China and global affairs.