Hot Commodities : How Anyone Can Invest Profitably in the World's Best Market

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Summary: EXCELLENT!!
Review: A GREAT BOOK. VERY WELL WRITTEN, VERY INFORMATIVE. A MUST HAVE FOR ANY INVESTOR --- WHETHER OR NOT YOU DABBLE IN COMMODITIES. THE WISDOM AND INFORMATION WILL BE OF BENEFIT TO ALL. DON'T MISS IT!

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Summary: Commodity Warning
Review: As someone who opened a commodity account in 2003, I must warn people that its is *not* a myth that you have a rare chance of losing your shirt like the book states.
Yes, One the one hand, commodities are simple, there are no accounting issues, neferoius managers, stock float issues, ponsei schemes etc..

But they are VERY RISKY things to manage. Lets go through what occurs - you read the book, with no information on futures, you open a broker account, you buy a futures contract, typically for between $50,000-$100,000 worth of whatever. This is done on margin - you are being charged interest on the loan as long as you hold it!

And - If you do not sell that contract before whats know as the 'last trading day' which varies from contract to contract you have to take delivery of say the 40,000 barrels of oil the contract is for! Fancy having that in your garden?

If you buy a long dated contract, to help get around this, you will find that you there is usually little 'open interest' which basically means that there is not much of a market, sellers and buyers setting prices, and prices are not reflective of reality.

Also, with any long dated contract, you will have to pay a premuim which differs from the 'spot' price, related to the feds cash interest rate. The further out you go, the more this premuim cost is, even if the market is liquid enough to absorb a longer dated contract. Say you bought a contract for Gold delivered 6 months out, Spot would be $400/Oz while the futures contract would add in this 'time' premuim - say $410/oz. So gold has to rise by OVER this amount before you break even.

Obvoiusly, you are also on margin with the broker, so have to pay him interest on your debt during the time you are holding it!

What you find is contracts are freqently rolled over, because of open interest reasons, which means that lots of people start selling well *before* 'last trading day', because they do not want delivery, and, as open interest starts to dry up on that contract, you too will have to move to the next month. You have to monitor your positions constantly and have a deep knowledge of that market to know exactly when datewise etc.. to roll over. For instance - You cannot 'get ill' with an online broker and not tell them that you do not want delivery, but would like to be rolled.

There are so many ways to get stuffed, its not something Rodgers can cover in his book. Which is why the book points to his fund really.

As you can see, its not exactly easy, worry free stuff. And then you have to know the market - every commodity market has supply and demand factors which relate to the economic/industrial climate, weather patterns, exchange rates etc...

It's so fraught with risk - you really DO have to know whatyou are doing, that you will be using a full service broker if you have any sense, and you still have to stock lashings of research (your valuable time) up on the individual market for the commodity. Supply and demand determines price, and technical traders can be caught out by the fundementals, you have to have a knowledge of both and a feeling of where you think it may go.

Its NO WAY like a choice between paper assets like stocks and bonds and raw materials. If you thought there was going to be a massive long run demand on a shrinking supply of commodity assets then, the stocks which own the such producing assets make more sense than the commodities.

Jim Rodgers has some interesting ideas about the times we live in, and he may be correct about the market becoming like the 1970s for the 13 or so years of the 18 in his thoery we have left to run since the market crashed in 2000. But a commodity broker is not the way to go for someone who like to sleep easy at night. As I see the Fed tigthening lots of commodities are falling back. Come real interest rates, many 'bandwagons' like Gold will plummet.



Rating:
Summary: Excellent guide for the novice investor
Review: I am someone who has watched Jim Rogers on Cavuto's FOX show for many years. Having become acustom to hearing about his vision on commodities, etc. this book was a must read for me. The book expands his argument on why commodities will be the next big investment idea. On the Cavuto show Jim has only limited time to develop those ideas and then he in constantly interupted by Ben Stein (Bueller?, Bueller?), et al. This book gives you access to Rogers thought process on WHY commodities will be going up in value. He explores the issues of supply (or lack thereof) and demand (with emphasis on China) and how this will lead to higher commodity prices. He specifically talks about Oil, Gold, Lead, Coffee and Sugar in separate chapters. I recommend this book for all of those who are starting out in their quest to learn more about commodites.

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Summary: Great insights from a world class investor
Review: I've been a fan of Jim Rogers for a long time. I've read his previous books (Investment Biker and Adventure Capitalist) as well as numerous articles and stories about him (Worth Magazine, Fortune, Barrons, etc). This book did not disappoint.

What I enjoy most about Rogers is the fact that's he's produced consistent results throughout his career. He made a fortune with George Soros in the 70's at the Quantum Fund (up 4,000% in the decade). He made huge calls about the crash of '87, the crash in the Nikkei, forecasts of emerging bull markets in Austria, Botswana, and numerous other countries. His move into commodities in 1998 was another great coup.

No investor is going to be perfect. No one will get it right 100% of the time (he's been overly bearish on the US since at least the early 90's). But I believe Rogers core philosophies will get you much further than anything else you hear in the mainstream media and by the talking heads on TV. They haven't made fortunes in the market for the past 30 years.

"Hot Commodities" is a good introductory guide to the world of commodity investing and more importantly, contrarian investing. Fortunes are made by thinking independently from the crowd, looking for opportunities that no one else sees and making sound, logical investment decisions. Rogers takes you down that thought process beautifully.

I knocked a star off because he could have discussed options and other ways of buying commodities in more depth. Some may see the book as a giant ad for his own commodities fund. More balance would have been nice.

All in all, some great insights from an investing legend.

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Summary: Pluses outweigh minuses
Review: In 1976 when I wrote my book, Energy Forecast to 1990, I should have, first, listened to Rogers. I was only half-right. Saleswise, the book was a clunker, deservedly so.Quick overview of Hot Commodities:Regarding China, right on. The world balance of trade seems to pivot off China these days. Their worldwide trade clout is awesome, and growing. To me, reading most of his other predictions, too, are like reading tomorrow's newspaper today. Overall, he seems to stress, wisely, that humble recognition of your own ignorance is the logical first-step essential to good commodities trading (something I learned the hard way). He then goes on to fill in the blank spots with some truly wise counsel.On the negative side: no worthwhile amount of space is given to commodities options, which is the small commodities investor's best friend--no worries about taking shipment, getting stuck, or mired with the actual goods--only paperwork transactions. I would have thought that a nod in this direction--particularly in selling put and call options, rather than buying--would have made this a superb "overview" book indeed.

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Summary: One of the greatest investors forgets his content page!!!
Review: On its arrival, I'm eager to turn to the content page, but......................

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Summary: Trading commodities may appear deceptively easy ...
Review: Please take the word 'any' in the title of this book with large doses of salts of disbelief. If making money was as simple as the title suggests then Mr. Rogers would not have invested his time and energy writing this book.

Trading commodities may appear deceptively easy and is often injurious to the financial health of even experienced traders. So it may utterly humiliate the beginner. Trading is complex, not only because of the scope of what you must learn, but also because of many other factors involved. The best way to learn is to start slowly and do mock trades, back test your strategies and monitor your performance. Trading is serious business and for those who approach the profession soberly and with reasonable expectations, the rewards are there.

Jim portrayal of India is not as positive as I had expected. India is set to be world's hottest destination for foreign direct investment in the next four years, according to a UN-sponsored survey. These results are based on a joint survey conducted by the UNCTAD in Geneva and by Corporate Location Magazine in London.


Rating:
Summary: Self serving to an extent
Review: Rogers wrote this book because he runs a commodies index and a fund to go with it. The book is poorly disguised advertising. With that said I believe Rogers is sincere in his beliefs. However, as usual there are several caveats. First, he quotes papers and research showing that investing in commodies in the past has been less risky and had better returns than equities or bonds. All of this research however ignores institutional risk associated with commodity investing. The fees are high, the market is sometimes manipulated, the investor virtually has to use a full service brokerage firm, and even Roger's mutual fund is available only through a broker and has high surrender charges. Second, although many money handlers like Rogers end up rich, it is almost never pointed out that the vast majority of their money is not made by their own fantastic investing but by charging high fees to their investors. Look at the fees on the Rogers fund. Good God. Third, the various commodity indexes that are out there are new. Gibson, in his book on asset allocation, took the Goldman Sachs index back to the good old days of the seventies not bothering to point out that the GMCI only dates back to 1992 and so this was essentially backtesting - a popular hobby even though there is much evidence to indicate this is not the way to go. There are good reasons to believe that the commodity bull market of today will not repeat the golden years of the seventies even though it is real enough. None of this even touches the fact that the average investor should only have 5 - 10% of his money (at the most) in commodities. Either high minimums on the funds or huge front and back end fees will keep everyman out. Nevertheless, Rogers is correct in his assertion that learning about commodities will help any investor look at the world in a different way, and, in the long run, teaching the investor the basics of understanding commodities is the real contribution of this book. Those looking for a commodity investing how to book will have to keep looking. He is pushing commodities indexing.

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Summary: Book covers the why, but not the How
Review: The title is somewhat misleading. The book doesn't cover any specific strategies on how to take advantage of the coming bull market in commodities. The author does a good job of explaining commodities and the present (next 10 years) case for their appreciation. He also describes commodities markets and contracts/futures but I was disappointed that there was no coverage of how an investor would invest in them using his bull market forecast. As mentioned by other reviewers, most commodities based investments are reasonably complex derivatives.

To be fair, this isn't a get rich quick book or a book on how to make short term plays on commodities. This to me was attractive. I bought the book believing commodities, as the author suggests, should be at the very least an important asset class for any portfolio. I'm still looking for a way (other then to invest in the author's own mutual fund which isn't available everywhere) to actually execute such a strategy.

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Summary: Doesn't really tell you how to invest in commodities
Review: This book basically discusses economic theory behing what drives commodity prices and spends a lot of time discussing why China will drive the prices of commodities in the future. There is hardly any discussion about investing techniques. I guess the author assumes that you will be hiring a broker. One thing I don't understand is how the author tries to discredit the common belief that commodity trading is risky, yet he doesn't discuss why this is a myth. If this book was titled "understanding commodities" instead of "how anyone can invest profitably" I would not have a problem with is book. If you are a beginner who wants to do your own trading this book leaves you with a lot of unanswered questions.