My Book Reviews

This book details Jim Rogers' motorcycle trip around the world from 1990-1992. The book's subject matter is about 80% related to his travels and 20% related to investing, which disappointed many readers who were looking for more investing-related information.

First, when reading a book like this, many readers like to go back and audit the accuracy of any predictions that were made (in this case, Rogers correctly called the continual drop in the Japanese market, while being incorrectly bearish on Ireland). The problem here is that any investor has the ability to change their opinions (and their positions) at any time, so grading an investor based on historical predictions is never fair.

Next, many readers considered his thin observations and lack of detail about some of the countries he traveled through to be a disrespectful cultural slight. They interpreted his dismissive attitude about some of the countries to be a moral judgment or an indication of superiority. But I disagree. The point of his travels was to form investment opinions, not to interact with people and learn more about their culture. His arms-length analysis and non-social behavior may seem to come off as condescending at times, but this is only because his top-down analysis (which is strictly observational) is done up close and personal, instead of from an office building in Manhattan.

As far as problems I did have with the book, Rogers does come off as a know-it-all and proposes overly-simplistic answers to complex problems. ("There is a simple, low-cost way to solve the whole problem of the gold standard and it's discipline on money - eliminate the capital-gains tax on gold.") He also comes off as an alarmist by claiming that the fiscal situation in the US is so bad that he was sure that we were going to have exchange controls by the end of the 1990s.

His economic philosophies are also overly simplistic and biased. He annoyingly recommends free markets as a fix for everything. He naively believes that the systematic economic ills of the Unites States (high budget deficits, political corruption) are a result of innocent incompetence that shouldn't exist within "true" capitalism. Hence, he dismisses the costs of these problems because they would contaminate his idyllic capitalistic philosophies. His inability to recognize the costs of his capitalistic idealism is revealed when his blind trust in his partner leads to him to almost getting ripped off. This naiveté would be more tolerable if Rogers were not such a well-traveled and generally intelligent person, but someone like Rogers should have known better. When Rogers does attempt to address these obvious criticisms of capitalism, he correctly refers to how the politicians have "sold our destiny", but refuses to realize that the corporations (the most capitalistic of creations) are the ones who have bought it. The politicians constitute the "sell-side" of the corruption process while the corporations are the "buy-side", and, as Rogers knows, it takes two participants to make a market. I much prefer Soros' philosophy of imperfect markets.

The key question from reading this book, given that it is about international economics, is "how will it help my international investing"? The answer, disappointingly, is "not much". One of the reasons is because Rogers often enters emerging markets when they are in their embryonic phase. He opens investment accounts at brokerage firms in developing countries where the stock exchange has just recently opened and may have only one employee. On more than one occasion, he even has trouble just being allowed to open an account in order to deposit money. An average investor should obviously never get involved in these type of ground-floor foreign investments because they are way too complicated and risky. Admittedly though, the proliferation of new investment products like emerging market ETFs and mutual funds makes these kinds of direct investments less relevant.

Another reason that I can't relate to his style of international investing is that his investment analysis it too political and historical. Attentive readers will notice how the text is relentlessly peppered with the word "statist". This is because his obsession with capitalism dictates that his investment decisions be driven purely by his economic ideology. His interest in getting in on the ground floor of a country's growth phase is done less for the assumed reason of maximizing profits, and more because he enjoys getting a read on when a country will be changing over from being socialist/communist to being capitalist. Personally, I'm less interested in "bottom-picking" the political trend changes of a country and am more interesting in monitoring already-established economies. Our differences are neither good nor bad.

There are many useful aspects to the book. (1) The observations of Russia serve as a rare, real-world study of communist economics. (2) His travels seem to occur during a period of transition in many countries. Therefore, the reader is able to learn about some of the leading indicators that a country is about to enter a growth phase. For example, a country's effort to create a stock market is an indicator that a country is maturing economically and is building a financial infrastructure. (3) The effect of politics and bureaucracy on economic growth, especially in developing countries (4) His acute social and historical observations. (5) And, of course, his random nuggets of wisdom about investing and economics.