Learn The Eternal Law Of Supply And Demand From Soros Fund Co-founder And Investor

2 December 2022

[Video Transcript]

The Eternal Law Of Supply And Demand

Insights from 'Investment Biker' by Jim Rogers

In his travels through Central Europe of the time, Jim Rogers strongly felt that anybody who put money into the Soviet Union and much of Central Europe was going to lose it because of the strife and chaos to come.

In his view, this was because there wasn’t one border in the entire area that was universally agreed on and logically drawn.

All such borders were settled in 1945 after World War 2 and therefore were artificial and unstable.

He says that none of the borders in Central Europe was rational—historically, linguistically, religiously, or ethnically.

For example, “Could anyone explain why Moldova was part of the USSR and not Romania?”

Why is this important for the investor? Let’s explain the links in the chain.

Rogers says what unites a country’s population and keeps it together is a rise in standards of living across the board.

A system of democracy doesn’t automatically guarantee growth and equal opportunities If standards of living do not rise, for example, because of inflation, the value of people’s savings as well as their spending capacity rapidly declines.

At this point, ethnic hostilities and strife can occur.

That’s because there is little to hold the country together and thus there can be rivalries based on identity and religion.

That is why, without strong and clear borders that have already created a sense of community, there’s a great danger of the country clamping down or collapsing when the economy is not doing well.

Naturally, this isn’t great news for investors.

The lesson we can take from this is that when choosing an investment destination, one should also look to see the health of the country’s borders.

Related Content: Watch More Emeritus Insights Videos From Best-Selling Books

You can find out whether they are legitimate and accepted by all.

Over the years, have there been protests or rival claims?

Are there small groups claiming their own identities and how are they being addressed?

What clues can you pick up about the effect of economic unrest?

About Emeritus Insights

Emeritus Insights is a daily learning platform with 5000+ lessons from the world’s best-selling books, top faculty, subject matter experts and exclusive lessons from Harvard Business Review. Get insights in bite-sized video lessons, share it with friends and colleagues and learn across a wide range of topics to shape your success.