The Silk Road to Riches: How You Can Profit by Investing in Asia's Newfound Prosperity [Hardcover]

An excellent guide for the long-term investor looking to benefit from Asia's imminent economic success.  --Kirkus Reports

Assuming that Mandarin Chinese will be the most important language in the coming decades, Quantum Fund founder and self-proclaimed investment biker Jim Rogers has employed a Chinese nanny for his daughter, according to several news reports. For the rest of us, our knowledge of Chinese likely will be limited to the menu at the nearest take-out. Still, this does not mean we cannot develop a fluent understanding of the implications of major growth in Asia, and in China in particular.

The new book The Silk Road to Riches attempts to provide investors with an understanding of the economic developments in Asia and a lesson in how to strategically align investments with this global growth. Initially, however, the authors do not present investment in Asia as particularly attractive. Instead, they cautiously advise readers about the hurdles they may have to leap in order to invest which, after having heard many invest-to-get-rich-quick schemes, this reader appreciates.

The authors explain the development of a middle class and Asia’s “path to prosperity,” and in doing so dispel a few negative misconceptions many Americans have about its growth. For example, this path to prosperity includes offering cheap manufacturing to foreign companies—more commonly known to Americans as offshore outsourcing. But before readers can begin to bemoan the loss of the Main Street shops to the development of more Wal-Marts — which does its share of outsourcing — the authors rightly point out that these countries, as they urbanize, require goods as well. In 2000-01, for example, China’s growth enabled the U.S. to increase its exports. Asia’s growth does not necessarily undercut American investors’ ability to grow their portfolios or the American economy’s ability to do well.

Another misconception that these authors debunk is the oft-held belief among investors that long-term investments in the stock market are basically guaranteed. Investors ignore the following: “Though prospects may be bright, the long term is comprised of many short terms—if one mishandles several short terms, it may be very difficult to achieve long-term success.” Investors need to understand and plan for this before developing an investment strategy.

In addition to debunking misconceptions, the authors provide throughout the book a comprehensive fundamental analysis of Asia and its active economic sectors. No book on the Asian economy would be complete without an analysis of China and India, whose vast potential for economic growth has held the attention of the globe for the past few years. Here the authors offer a glimpse into the social and political histories of each country, and an assessment of how those histories, from India’s democracy to China’s communism, may influence their economic development.

In particular, the authors provide a detailed analysis of agriculture and energy. For example, they narrow down the food consumption habits of Asian companies. Did you know many Indians have quite a sweet tooth? Ten percent of their daily caloric intake comes from sweets and sweeteners. In addition, the authors also point to two major companies in the fertilizer business that will greatly benefit from China’s fertilizer demands as they produce more food.

They are just as thorough in their explanation of Asia’s energy needs and how those needs will affect many companies, reviewing numbers and citing the activities and business of particular companies. They even go so far as to discuss the hydrocarbon molecules that make up heavy crude oil, describing certain varieties as sour and others as sweet. This is not common knowledge, but it is knowledge that will be useful for investors looking at investing in oil refineries.

The book concludes with analyses of several other Asian market sectors and companies that stand to benefit from Asia’s economic growth. From entertainment to shipping, they discuss major players in each sector. Needless to say, this book will surely appeal to astute stock market fundamentalists. Even technical analysts, if they are willing to use fundamental information to support their buy signals, will find this book filled with valuable insights.  --Stocks, Future, and Options Magazine