Jim Rogers recommended investing in Asian Markets
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Well known investor Jim Rogers mentioned in Economist Conferences’ third annual Asia CEO Agenda about great opportunities in places like Myanmar and Sri Lanka, and especially China.
But he has reservations about Indian market, giving reasons such as bureaucracy and infrastructure problems. As in a place with less than ideal infrastructure like mentioned here, how can you start a business to sell something or provide services?
Reasons given for investing in Sri Lanka includes ending of a 25 years war with Tamil Tiger rebels while that for Myanmar is an educated population endowed with vast natural resources.
As for China, it is of the common reasons of huge population and significant increase in middle class incomes population in next decade. In other words, China will become an economic powerhouse in the foreseeable future.
To add weight to his arguments, data from Merrill Lynch survey of 220 fund managers who collectively managed more than US$600 billion in assets says that 80% of them were “overweight” into Chinese equities.
In addition, he stress that equities prices are going to get worse for markets in general with US policy makers repeat the same old mistakes during Great Depression like bail out banks and attempt to resort to protectionism.
Predictions by veteran investors like Jim Roger, Oei Hong Leong, and even Warren Buffet (those well known with Midas touch) are no substitute for thoughts. That what I believe is that blinding appealing to authority without thinking things through is one sure way to end up losing money.
As eventually, whether specific statements regarding investing applies to your specific circumstances depend very much on your own circumstances.
Whatever business you invest in, never forget 12 tenets in purchasing stocks, especially if you are in for a long term of more than 5 years.
If you intend to buy stocks with the intention of selling it tomorrow, or even better, short the shares in anticipation that the prices will drop in the next 3 days, then concepts from technical analysis will be more useful and not what Jim Rogers said above.
Despite his arguments about Myanmar, it is nevertheless still not a democracy, and businesses there stand a good chance of being taken away without questions asked by the junta.
As for China, though it is in general, going to become the World 2nd largest economy soon, which companies you buy, or your mutual fund company buy is still the key. You don’t need to pay for those active portfolio management funds if all you want is participate in long run growth of China economy. You can simply invest in some index fund that broadly tracks the overall economy.
If every single one of the fund manager that manages US$600 billion become “overweight” in Chinese equities means subjecting themselves into Newton 4th law of motion - as motion increase, returns decrease.
The percentage of “overweight” in Chinese equities is not mentioned, given the sheer volume of the US$600 billion chasing after Chinese equities. One may be better off buying into good US companies, as less cash is available from them for other countries.
India inadequate infrastructure and excessive bureaucracy on the other hand means that existing businesses have additional barriers to entry. Dig out those businesses and invest in them, especially if demand for their products and services are there and foresee to grow with population increase and most importantly, the businesses got good brand loyalty.
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