Tags: Going | Long | on | China

Going Long on China with Jim Rogers

By    |   Friday, 28 March 2008 01:59 PM EDT

Jim Rogers is a super-investor but also a very private investor.

As CEO of Rogers Holdings, he rarely reports what he is doing. However, he is a frequent market commentator and offers some insight into his trading ideas when speaking with the business press.

Rogers is an undeniable superstar in the investing world. He partnered with the legendary George Soros to co-found the Quantum Fund in 1970. Over the next 10 years, the fund gained 4,200 percent.

In the same period, the S&P returned 47 percent. In 1980, a rich man, Rogers decided to retire and travel the world by motorcycle, later the subject of two best-selling books.

His guiding investment principle is "buy at low prices and sell at high prices."

Seems simple, but he's gutsier than that. Rogers believes, for instance, that prices are never too high to start buying nor too low to start selling. To back up his strategy, Rogers looks at macroeconomic trends and buys what he thinks will be long-term winners.

In a recent interview, Rogers said he had sold his holdings in all of the emerging markets except for China, and that there are no reasons for him to sell his Chinese stocks.

Gutsy? Considering many other pundits are predicting a China crash, absolutely.

Rogers has long been a commodity bull and expects commodity markets to continue higher into the next decade on basic imbalances of demand and supply. He has predicted, too, that gold will exceed $2,000 an ounce before it's done with its meteoric rise of late.

He is investing, too, in agricultural commodities such as cotton, wheat, coffee and sugar.

"Buy agriculture. Agriculture is one of the few places where you're going to make a fortune" in the coming years, he has said.

In terms of currencies, Rogers is bearish on the U.S. dollar and bullish on the Japanese yen.

Based on these simple philosophies, here's a superstar screen on how to build a Rogers-style portfolio. Remember, he thinks very long term.

iShares FTSE/Xinhua China 25 index (FXI)

An index of 25 of the largest and most liquid Chinese stocks. Major holdings include telecoms China Mobile and China Telecom, insurance, banks and oil giant PetroChina. Recently trading at 131.35 with a P/E ratio of 18, this fund also offers a dividend yield of 1.38 percent.

Claymore/AlphaShares China Real Estate (TAO)

This exchange-traded fund tries to match the results of AlphaShares China Real Estate Index, which tracks publicly traded companies involved in property investments and in real estate investment trusts in China. Recent price was 19.36 with a P/E of 19.

streetTRACKS Gold Shares (GLD)

An alternative to direct ownership of gold, GLD is the most liquid exchange-traded fund that holds gold bullion. Recent price was 93.80.

Market Vectors Gold Miners ETF (GDX)

As gold prices rise, miners' expenses often stay the same, thus profits increase. Owning mining companies can be more profitable than bullion, at times, and GDX offers a diversified group of these companies in a single investment. Trading near 49.90 a share, GDX has a P/E ratio of 33 and pays a dividend of 1.40 percent.

PowerShares DB Agriculture Fund (DBA)

Futures contracts on corn, wheat, soy beans and sugar offer great returns and, consequently, great risk. This exchange-traded fund limits the risk for individual investors to a level similar to the risk found in any other stock investment. Trading at 38.92, the fund is up more than 13 percent in less than three months.

ELEMENTS Rogers International Commodity Agriculture ETN (RJA)

This index represents the value of a basket of 20 agricultural commodity futures contracts, and should be less volatile than DBA. The index it follows (although not this fund) is overseen by Rogers himself. Priced recently at 11.75.

China Organic Agriculture (CNOA)

At a recent 1.14 a share, this is a speculative stock for aggressive investors. The company grows and distributes high quality organic rice in mainland China. Earnings of $0.20 a share give it a P/E ratio of under 6. It is likely to profit from growth of the middle class there.

CurrencyShares Japanese Yen Trust (FXY)

A tool for individual stock investors who want long currency exposure to the yen. Currency exchange-traded funds (ETF) offer upside without the large loss potential found in futures trading. This ETF was recently priced at 100.49.

PowerShares DB US Dollar Index Bearish (UDN)

An ETF that profits when the dollar declines by selling futures contracts against a variety of currencies. This speculative investment recently traded at 29.67.

Tsingtao Brewery Ltd (TSGTY.PK)

Rogers is an advocate of buying the biggest brewery in emerging markets, noting in his travels that people around the world enjoy beer. With a recent price of 26.10, Tsingtao trades at a P/E ratio of 26 and a dividend yield of 0.75 percent.

© NewsMax 2008. All rights reserved.

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MichaelCarr
Jim Rogers is a super-investor but also a very private investor. As CEO of Rogers Holdings, he rarely reports what he is doing. However, he is a frequent market commentator and offers some insight into his trading ideas when speaking with the business press.Rogers is an...
Going,Long,on,China
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2008-59-28
Friday, 28 March 2008 01:59 PM
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