Hot Commodities: An Amazon Review

"Highly readable and entertaining. It isn't necessarily going to benefit those who are already very knowledgeable about commodities, nor does this book tell you how to trade commodities. It isn't a practical guide but rather Jim suggests what you should look at when constructing your world view.
In Hot Commodities, Jim presents a strong case for why you should invest in commodities if you are going to invest at all. He doesn't recommend short-term punts or the use of leverage, he admits that if you are capable of trading then that's your prerogative. However, most people who wish to invest are just not suitable for leveraged trading. In fact he advocates simply buying a broad index of commodities rather than trying to pick the best. This corroborates with the findings of Bogle: index investing is best.

His arguments rely upon historical events and examples from his earlier days as analyst, he relates previous examples of the 70s and 80s to the situation we have now. While many people (politicians?) might have blamed speculators for high commodity prices in the 70s, Jim points out that speculation or market manipulation is hard to achieve over a sustained period of time. The cause of inflation, as Jim presents it, is due to something. One part of the high commodities' prices in the 70s was due to the natural cycle of commodities versus stocks (a theory that is fairly unique to Rogers), and the other part is due to the killing of the gold standard plus other monetary / fiscal policies. In the current climate Rogers believes we back in a commodity bull (upward trend) while stocks are bearish (lack of a strong upwards trend). This commodity bull cycle will likely come to an end in 10 - 20 years and then we'll likely be back to a bullish stock market. These long term trends are secular bull and bear markets, Rogers proposes the theory that stocks and commodities are bullish in the counter periods to each other.

Why is the author trustworthy? Anyone that regularly watches Jim on tv will know that he is consistent with his recommendations and analysis. He never claims to be right 100% of the time nor that investing is easy. Rogers comes across as honest and humble. Jim has never compromised his analysis because others dislike what he says. He presents the facts as he sees it and is unapologetic about it. Unlike other contemporary investors such as Soros, Roubini, Buffett whom seem far too willing to bend to the views of a particular government."

Hot Commodities, Amazon Review from Edward A. Thomson