By
Tom Dyson, publisher, The Palm Beach Letter
Monday, June 23, 2008
Jim Rogers picked up the phone and called a German stockbroker. He asked the broker to buy him a portfolio of German stocks...
"I think you're about to have the biggest bull market you've had in two or three generations," Rogers told the broker, noting he planned to hold the stocks for three years.
The request confused the broker. Normally, clients would ask him for research or his opinion. He wasn't used to Rogers' forthright manner. Besides, Germany had been in a bear market for two decades. The broker couldn't believe anyone would be crazy enough to put so much money into German stocks.
"The broker was dumbfounded," says Rogers. "He thought I was a madman."
It was 1982. The German stock market crumbled in 1962 and had traded sideways ever since. Meanwhile, the German economy had boomed, and companies multiplied their earnings, revenues, and profits.
The situation caught Jim Rogers' eye...
"So there was basic value there," Rogers said in a 1989 interview. "If there is very good value, then I'm probably not going to lose much money even if I'm wrong."
Buying value is a great strategy... but it doesn't work without timing. For instance, Rogers could have bought into Germany five years earlier on the same theory... and sat on dead money for five years.
So Rogers waits for a catalyst. In this case, the catalyst was an election. Rogers knew Germany would throw out the socialists and elect the pro-business Christian Democrat party. He figured German firms would pile money into the economy if the Christian Democrats won the election.
Rogers was right. The pro-business party won the election, and between 1982 and 1985, German stocks nearly tripled.
Jim Rogers is a legend. His book Investment Biker influenced me more than any other finance book I've ever read. I first picked it up 10 years ago, and I've followed Jim Rogers ever since. I've watched his interviews on television, read newspaper stories about him, and attended a couple of his lectures. He doesn't make many investments. And he's always forthright with his opinions. It's never hard to figure out what he's doing with his money.
I can tell you, Jim Rogers is never wrong. Just look at the two trades he's recommended so far this decade. In 1999, he started telling people to buy commodities. He set up an index to track commodities – the Rogers International Commodities Index – and published a book about commodities in 2004. The Rogers International Commodities Index is up 470% since inception.
China was his second trade of the decade. He's been talking up China since the early part of this decade, too. The Chinese stock market went up 400% between 2006 and 2007...
Now Jim is recommending a new trade.
He started investing in this idea in March. It was the first time in his life he'd ever bought a stock in this country. Then, in April, he told an audience he liked this country so much he'd like to live there. The local stock market jumped 2% when traders heard Rogers make these comments...
This stock market has lagged the rest of the world for 10 years. It's the cheapest stock market in the Datastream database of international stock indexes.
And we have a catalyst. Just like in Germany, a new political party recently won power in this country... And it promises to make major changes.
Jim Rogers tripled his money in Germany. I think he'll triple our money in this market, too. I'll tell you the name of the country in my next column.
Good investing,
Tom
Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
CBS (CBS)... media
AIG (AIG)... insurance
Nokia (NOK)... cell phones
News Corp (NWS)... media
Carnival (CCL)... cruise line
Reynolds (RAI)... cigarettes
Sears Holdings (SHLD)... retail General Motors (GM)... automobiles
Imperial Tobacco (ITY)... cigarettes
General Electric (GE)... conglomerate
Merck (MRK)... Big Pharma
Sirius (SIRI)... satellite radio
XM Radio (XMSR)... satellite radio
IRSA (IRS)... Argentine real estate
Banco Macro (BMA)... Argentine bank
Tran Gas Del Sur (TGS)... Argentine utility
Telecom Argentina (TEO)... Argentine telecom
Whole Foods (WFMI)... expensive groceries
China Southern Air (ZNH)... China's largest air carrier
Almost every bank you can think of
Almost every newspaper publisher you can think of
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