Wednesday, November 21, 2007

Jim Rogers-Master of Investments

As a follow-up on the previous post, I would like to point out just to some examples regarding why Jim Rogers is a master investor whose opinion should deserves to be noted. Not only did he for example achieve abnormal returns in the Quantum fund he managed with George Soros and predict the beginning of the commodity price boom in 1998. He has recently made real big gains selling U.S. financial stocks short.

In the Bloomberg interview from November 2 where he characterized Ben Bernanke as "a nut" for his inflationary ways, he also told the interviewer that he is selling short shares of Citigroup, America's largest bank, and Fannie Mae, America's largest mortgage lender. For those of you who don't know, selling short means borrowing shares from someone, selling those shares and then buying the shares back at a later point. If share prices fall, then this strategy will make you money.

Since that day, Citigroup shares have fallen from about $40 to $31, giving short sellers like Rogers a 20% return in less than 3 weeks. Assuming he actually made the short sell a few days before the interview, the return would have been more like 25%.

But that's nothing compared to the gains Rogers have made from selling short shares of Fannie Mae. That stock has plummeted by roughly 50% since the interview, giving Rogers a equally sized gain. And that's in less than three weeks.

This is not to say that Rogers is always right. But he is almost always right, and that is why I feel comfortable about the fact that I am on almost all investment issues in agreement with him.


Anonymous Anonymous said...

Jim Rogers went short bank stocks a couple of months ago and Warren Buffet bought bank stocks just recently.

Göran, Sweden

3:33 PM  

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