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Tuesday, December 15, 2009

Jim Rogers: other things being equal, buy commodities, not commodities stocks

Studies show, in my experience, that commodities themselves outperform commodity stocks. In the ‘70s, oil prices went up 10 times; commodity oil stocks did nothing. With stocks you have to worry about the management and the balance sheet—a hundred things. Commodities are pretty dumb: If there's too much oil, the price is going to go down; if there's too little, it's going to go up. Oil doesn't care who the head of the Federal Reserve is; it doesn't care what laws Congress passes, for the most part. But if you're Exxon, you've got to worry about that stuff.

The studies show that you would've made 300 percent more investing in commodities themselves over the past several decades than in commodity stocks, but if you know a company that's going to discover a lot of natural gas in Berlin, you buy all you can. Then you call me. Because then you're going to make a lot more money than in commodities themselves.
-- from "Jim Rogers: Long Sugar, But Getting Short Bonds", an interview with Jim Rogers by Heather Bell.

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