Jimmy Rogers is a well-known long-term bull on China. He saw the potential of China long before the mainstream investment community even had China on its radar. Therefore, we can presume that he had already invested in China since very long time ago (say, 20 years ago perhaps??).

If you have already invested in China that long ago, the value of your investments would already have grown gigantically by today. In addition, if you hold a really long-term view on China, it does not make sense to sell your long-term investments on China (that you’ve made, say 20 years ago) unless your long-term view on China turns negative. Thus, from this perspective, any talk about impending major economic correction (see Is the Chinese economy a house of cards?) in China should not perturb you too much. On the other hand, if your investments in China are made just a few years ago, you would have missed out a lot on the way up. Consequently, you will be more concerned about any looming down-draft in the Chinese economy.

Jimmy Rogers, in a recent interview, said that he is not worried about any potential “economic hardships, civil wars and even wars” in China. He then told his listeners to look at America in the 19th century, when there were “15 Deflation, a civil war, lots of economic problems, no human rights, riots in the streets and massacres.” Yet “America emerged and became the most successful country in the 20th century.” In his opinion, all these are ‘temporary’ problems that countries can recover from.

But let’s play the devil’s advocate here. These problems are ‘temporary’ in the bigger picture that can span many decades. They can easily last beyond an investor’s lifetime. You will only adopt Roger’s view if your investment horizon is so long that you’re investing no just for yourself, but for the next generation too.

But there’s one potential problem in China that Jimmy Rogers believes will alter his long-term views on that country.

Water.

Cities, societies, nations disappear because the “water disappears.” Indeed, China has a serious water problem, especially in the north. To date, China had spent “hundred of billions of dollars” trying to solve their water problem. In other words, if the Chinese does not solve their water, then the “China story is over.” From this, we can tell that Jimmy Rogers is probably influenced by this book, Collapse: How Societies Choose to Fail or Succeed. As that book argues, throughout history, environmental crisis are often the catalysts for the collapse of complex societies all over the world.

So, in future, we will look at water problems from an investor’s perspective.

Tags: China, Jimmy Rogers, water

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