Den of The Lion Investor

I managed to obtain from my friend an audio clip that had a short interview of Jim Rogers following his speech at NUS a couple of weeks ago.

Click on the player below to listen.

The transcript of the interview provided by my friend Ai San Yip of Huatopedia Forum and with additions done by me can be found below:

China Journey

Media: You travel a lot, what do you see in ordinary people?

Roger: You learn more from the ordinary people than you do from the government.

I mean, I could go and see the government officials, I know what they are going to say. I can say it better than they can. I’ve been investing around the world and going around the world for a long time.

Where you can really find out what’s going on about the world is to see the world close to the ground and talk to ordinary people.

You cross the border and you are going to find out more about the country than if you fly into an international airport and go through customs and immigration. Because millions of people live across the border out in the jungle or in the deserts, and then you get to find out what’s really happening.

Media: Could you describe an unforgettable moment while you were travelling in China?

Roger: Well, I have been to China many times. I was in Hami, Xinjiang (哈密、新疆). It was the first time I drove across China. They didn’t have many hotels in those days.

I went into the hotel. It was very hard and I couldn’t figure out what it was. And then I realised it was a bag of rice. They gave me a bag of rice for a pillow. There was no tourist in China, nobody travelled in China. That’s when I realised a great opportunity existed in China as it continued to open up because there was no tourism.

And that’s what I now know, there’s fabulous opportunities for tourism in China.

Where to put your money

Roger: Things that are going to come out of this unimpaired is where you should have your money. And (one of) the many things that I know of is going to be commodities.

Most companies and most especially financial companies have been damaged. Now,they are not going to be great stocks. Coming out of it, I’m saying the fundamentals that have not been impaired - agriculture, water treatment, tourism in China, things like that. I have no idea what kind of (—) you can expect. I think all commodities will do well.

Stocks

All have been beaten down right now. I’ve covered a lot of shorts on Thursday. I’ve been covering shorts and when you have a panic like this, it means you always think you should be buying - who knows. I think even if you have a rally from here, it could be a bottom is being formed, but I don’t think it’s the bottom yet.

Singapore Financials

Media: What can Singapore learn from this crisis?

Roger: Singapore has learnt a great lesson. Save your money. Save a lot, invest wisely and don’t do a lot of foolish things. Your government is not printing a lot of money and doesn’t seem to be printing money.

So far from everything that I can see, Singapore government is doing the right thing. Now, Singapore is going to be affected by all of this, but Singapore has more foreign currency reserves per capita – than any other country in the world that I know of. The last country standing is going to be Singapore.

New Market Opportunities

Media: What are the new markets and opportunities?

Roger: The new stock market in Cambodia which should start next year if it’s on schedule. It might do good things for Cambodia. I’m optimistic about Cambodia. Myanmar is another place that has magnificent opportunities.

It is changing, and places that have the best opportunities are probably the ones which haven’t been exploited, such as, Myanmar, Cambodia and North Korea. They are starting to open up slowly. That’s where you’ll find the best opportunities, going forward.

Stage (From Left to Right): Professor Gillian Yeo, Executive Associate Dean, Nanyang Business School; Ms. Elim Chew, Co-Chairperson, Culture & Education Action Crucible, Action for Community for Entrepreneurship (ACE) and Member, NUS Board of Trustees; Mr. Jim Rogers; Professor Bernard Yeung, Dean & Stephen Riady Distinguished Professor of Finance, NUS Business School.

Photo Courtesy of National University of Singapore Business School.

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The second installation of the Growth Dividends due to us will be deposited into our bank accounts in 1st October 2008. As announced during the recent National Day Rally, there will be an increase in the amount for the second payment.

If you have signed up for the GST Credit, you will automatically qualify for the Growth Dividends and need not do anything. If you have yet to sign up for your GST Credits, you will have to do so in 2008 to receive your Growth Dividends.

For more information on eligibility and the amount you are getting, you can visit the Growth Dividends website.

Yesterday, I saw an interview of Jim Rogers on our national television. Jim is the co-founder of the Quantum fund together with George Soros and currently resides in Singapore.

In the interview, Jim Rogers was asked about the current areas of investments that were worth considering.

Instead of telling people what to buy now, Jim said he would rather tell us what his current investments were instead. He added the usual disclaimer that these investments can go both up or down. In a nutshell, these are some of his current investments:

• Commodities. He especially likes agriculture. He also invests in his own Jim Rogers Commodities Index.
• Singapore dollar and Renminbi
• A few China stocks
• Short positions in US financials

Jim Rogers also shared on some of his investment philosophies. He does not believe in the concept of diversification. The key to investing is to find out what you know especially well, and then wait for opportunities to invest in that area. When the right opportunity comes, you should not be afraid to put all your eggs into that basket and then to watch that basket very, very carefully.

As Jim said, if the money is out there, you should go and grab it.

Using such an investment method could make someone very rich if the investments turn out to be correct. Jim quoted a few examples of very rich individuals who made their wealth primarily from one company. Obviously, to have the conviction to use such a method, it requires you to know that particular investment really well.

It also requires a lot of patience. The wait for that right opportunity will not occur weekly, monthly or even yearly. If it occurs monthly, then something is probably wrong with your filtering criteria.

Sometimes, it could take many years. For example, Jim started investing in commodities in 1998. He expects to hold them until 2018. He has also held his China stocks for many years.

Personally, I have been trying to reorganise my own portfolio to make it less diversified. When I find an investment idea that is compelling, I’m not afraid to take a large holding by trimming some of my other positions. This method might not be suitable for everyone though.

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I found out yesterday that UOB was offering a 2.88% p.a. promotional interest rate for balance transfers from a CashPlus account. The current market rate for a promotional balance transfer is around 3.88% p.a. There are also interest free offers around but typically these come with an admin fee of 2.0% to 2.2%.

A note of caution:

I’m not asking you to do a balance transfer from your UOB CashPlus account.

Debt is a two edged sword and should always be used with caution. Most people would probably be better off not utilising their line of credits, but there are times when taking on debt might be beneficial.

More on this in tomorrow’s post.

Recently, Warren Buffett did an interview with CNBC’s Becky Quick. There’s one statement he made that I think we should always bear in mind when it comes to investing.

BUFFETT: I mean, if you’ve got a great deal in this country, you don’t have to go to Beijing, you know, or the Middle East to find somebody with money to fund it. It’s like when oil prospectors would come up here from Texas and they’d say, `We got a wonderful deal for you in Texas,’ I always thought, there are all these oil men in Texas, you know, why didn’t they call on them?

QUICK: So you think the sovereign wealth funds are getting the raw end of the deal when they buy into some of the financials?

BUFFETT: I think that they are buying what is being sold to them, and in securities you should not buy what’s being sold to you. You should buy what comes from your own analysis and looks the cheapest. The idea that somebody is going to come and call on you and say, you know, `Buy $2 billion worth–this is the best thing to buy in the world,’ it isn’t the best thing to buy in the world.

The best thing to buy in the world is something that you’ve dug out and that people aren’t talking about and that, you know, you find yourself. Securities that are being sold to you have a special push in it. Usually, there’s extra commissions in them or all kinds of things. So I don’t–I don’t want to get ideas from other people, basically. I want to get ideas from a bunch of facts that I uncover someplace.

If we can remember Warren’s words of wisdom, it will probably help us eliminate a lot of bad investment choices. It might be a bit difficult but I suppose that is what separates the world’s number one investor from the rest of us mere mortals.

If you like to read the transcript or watch the video of the interview, you can visit these pages:

Warren Buffett Interview Transcripts and Video

Quick Summary of Warren Buffett Interview