Street smarts | Jim Rogers

Published: 2013

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Investor Jim Rogers sold his New York mansion in 2007 and took the family to Singapore. He believed that the 21st century would be the century of Asia and wanted to give his daughters the best conditions. There, his 12 and 17-year-old daughters [2020] have learned to speak Chinese fluently. This book mainly explains why Rogers is convinced that Asia will take over as the worlds powerhouse in the next hundred years.

THREE CENTURIES, THREE POWER NATIONS. The 19th century was the century of world trade, and it benefited the British, who were strongest at sea. In 1916, Britain covered large parts of the world map and was the world’s richest and most powerful country. But empires always get too greedy. After the two world wars, Britain was heavily in debt, the pound weakened sharply and it became clear that the country had long since lost its position as world leader. Rogers believes that those who wanted to seek financial success did best in London in the 19th century, in New York in the 20th century and in Asia in the 21th century. The United States is now the world’s largest debtor nation ever, while the world’s “creditor nations” are in Asia

FINANCE IS LOSING GROUND. According to Rogers, the world is currently undergoing a cyclical shift from the financial world having control to the fact that producers (farmers, miners, energy suppliers and lumberjacks) will be at the top. Historically, time periods in which the financiers have had control have alternated with time periods in which the producers have had control. In the 1950s, 1960s and 1970s, before the big bull market, Wall Street and the City of London were backwaters. If Rogers is right, they will soon be again.

CHINAS MIGHTY PROGRESS. Only 40 years ago, China was barely on the economic world map. India was far ahead. But after China opened up borders and trade with the rest of the world, the country has become the world’s largest economies. China has also long been in a buying sphere where it buys productive assets such as oil fields, plantations, ports and mines around the world. According to Rogers, China’s rise will mean that Chinese tourism will increase sharply over the next twenty years. The Chinese have not had the opportunity to travel for decades but can now move around the world painlessly. They will be the new Japanese.

A US IN DECLINE. In the United States, the “suing industry” is one of the most prosperous and growing. The United States has more lawyers than the rest of the world combined. This leads to a more inefficient business life where businessmen are constantly afraid of being sued (which holds back development). When the rest of the world does not do this, it becomes a major competitive disadvantage for Americans. The United States also spends most in the world on healthcare, even though it is nowhere near the top places in the world’s healthiest countries. On the list of life expectancy is the United States number 46 [2020].

A JAPANESE SCENARIO IN THE US. In 1990, the price of a golf club membership in Japan could be the same as for a house. The asset bubble would then soon burst. But the Japanese state did not allow the capitalist system to run its course. When companies were not allowed to go bankrupt, what are now called zombie companies were created. When the book was written, it had been twenty years since the crash and the stock market still was down 75% from the top. Rogers believes that the US state’s involvement in the financial crisis is similar to Japan in the 1990s and that the Americans can count on two lost decades – at least.

BULLISH ON MYANMAR. In 1962, Myanmar, then Burma, was the richest country in Asia. That same year, General Ne Winm took over, which was the start of 50 years of military rule. Through a Soviet-like planned economy, the country was closed to the outside world and became one of the world’s poorest countries. Today, Myanmar is in a similar situation as China was in 1978 when Deng Xiaoping took over. With 60 million inhabitants, large commodity resources, a well-educated and disciplined workforce, Myanmar will offer good investment opportunities. In addition, it is located midway between India and China.

SCEPTIC TOWARDS THE DOLLAR LONG-TERM. A weakened currency is a weakened quality of life. An American who doubles his money by buying shares in IBM has not made any money if the value of the dollar against the outside world has been halved at the same time. The American can still buy the same amount of Scotch whiskey and the Japanese Toyota still costs the same amount. This is also notwithstanding the “profit tax” on the investment.

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