Wednesday, February 9, 2022

Investing Legend Jim Rogers on What and Where to Invest Today -- Part 1 and 2

 Source for Part 1:

"Jim Rogers is an investing legend. He and George Soros co-founded the Quantum Fund, one of the world’s most successful hedge funds.

After generating returns of 4,200% over 10 years, Jim quit full-time investing in 1980 to do whatever he wanted.

Since then, he has become a best-selling author and holds several Guinness World Records – including “Most countries visited in a continuous journey by car.”

He has traveled around the world by car and motorcycle – trips that were the basis for two of his books, Investment Biker and Adventure Capitalist.


... Jim lives in Singapore, and when I lived there too, I met with him a number of times.

... What’s Next for Markets

Kim:
It looks like we might be at an inflection point for markets just now, with inflation at the top of the agenda and the Federal Reserve talking about raising rates. And then debt, one of your favorite topics, is at all-time highs, still – and again. How do you see all of this unfolding over the next year or so?


Jim:
As you and I have discussed before, 2008 was a bad bear market because of too much debt.

And since 2008/2009, the debt has skyrocketed.

I mean, it’s staggering.

And it’s not just in the U.S. I mean, it’s unbelievable what the Japanese are doing – the money-printing in Japan, the U.S., everywhere.

Whatever they’re setting us up for, it’s going to be staggering.

And I said to you before, it’s going to be the worst bear market in our lifetime because the debt is so, so much higher than it was in any other bear market.

I know that when it comes, it’s going to be very, very bad.

What will happen is, as interest rates go higher, and the market gets worse and worse, they will panic.

You know, these guys are bureaucrats and academics.

They don’t know what they’re doing.

So, they’re going to panic somewhere along the line, and say, “Oh, we’re sorry, we’re sorry.”

And they’re going to print more money, and buy more assets, and have one last big rally.

And then that’ll be it.

That’s my view of the world.

So, when 2023 comes, if 2023 comes, we’re all going to be in trouble.

Kim:
So you think at a certain point the market will fall, and the Federal Reserve will cry uncle – and then say, “OK, OK, we’ll print more money,” and then markets will go up again?


Jim:
If you look back at history, when interest rates are raised, the markets get scared… but that usually doesn’t end the bull market.

They have to raise rates more than two or three or four times before it ends the bull market, and I suspect that will be the same this time too.

Everybody thinks the Fed can save anything and will save everything

… And that won’t happen.

Assets to Avoid

Kim:
In the scenario you’re describing, what assets would you most want to avoid? Or is it pretty much everything?


Jim:
Well, bonds are definitely in a bubble.

Bonds have never been this expensive in the history of the world.

So, I’m not buying bonds.

Also, property is becoming a bubble in many places – Korea, New Zealand, and from what I’ve read, parts of the U.S. too.

And all over the world, which is partly because of interest rates.

Some stocks are bubbling…

You know the names as well as I do.

Now, that doesn’t include everything, because there are still many stocks in the U.S. that haven’t gone up.

One reason I haven’t bailed out and don’t have shorts is because there are still a lot of stocks that haven’t participated in the rally of past years in any serious way.

The Only Cheap Asset Class – and How to Buy It

Jim:
I’m not wildly eager to rush out and buy much of anything right now.

If I had to buy something, it would be commodities.

Because I know that as things get bad, they go to print, print, print, borrow, borrow, borrow, and at least something has to go up in price, and that will usually be real assets.

The only asset I know that is still cheap is commodities…

During inflationary times, prices go up.

And if you own the things that go up in price, you make money.

If you protect yourself, you might even get rich…

I’m not buying gold or silver right now.

I own them. I am not selling them.

I would buy more commodities.

Kim:
With the Fed printing so much money and inflationary concerns, isn’t it almost the ideal scenario for gold and silver? But yet, they haven’t really done that well.


Jim:

It certainly has historically been the case.

Don’t forget, gold hit an all-time high a few months ago.

It’s not rushing up now.

In fact, it’s down.

And silver of course is down around 60% from its all-time high.

I don’t have an answer to your question, except to say that they were very strong earlier, a year or so ago.

And people are all putting their money into stocks.

They’d rather buy Amazon than silver at this point.

Not me but many, many people.

I really have no answer.

Kim:
What’s the best way to buy commodities?


Jim:
Many, many studies show that most people should invest in indexes.

And they will do better than nearly everybody else, whether you’re a professional or an amateur…

I know that the ETFs are going to outperform nearly everybody else.

So, I prefer to buy the Rogers indexes…

They’re listed on the New York Stock Exchange.

It’s very, very simple.
[Jim developed and launched the Elements Rogers International Commodity Index – Total Return ETN (RJI), which is based on the Rogers International Commodity Index (“RICI”). Three sub-index exchange-traded funds (ETFs) linked to the RICI are also listed, linked to agriculture (RJA), energy (RJN), and metals (RJZ).]

Jim:

I use the Rogers indexes on the New York Stock Exchange…

I know they’re probably going to outperform everybody, including me.

And so far, they have.

By the way, I own all four of them.

I think if I were buying one today (and I’m not), I would probably buy energy or agriculture right now.

Some metals are in great demand because of what’s happening with technology, electric vehicles, and the electrification of the world…

These things are strong, so I’m not rushing out to buy them right now.

China’s Future


Kim:
Shifting gears to the international side… You’ve long been a big fan of China and its future. [In 2007, Jim wrote a book called A Bull in China: Investing Profitably in the World’s Greatest Market.] But over the past year or so, the regulatory environment has really changed. Do you see what’s happening as a structural change, or just part of the cycle and once the politics change, it’ll all be OK, it’ll come back?


Jim:
Well, a couple of things they have been doing in China are long overdue.

Property just got totally out of control in many parts of China.

Beijing talked about doing something about property for a long time, and now they’re finally doing it.

It’s only in the last year or so that they’ve started really doing something about property.

And, yes, that bubble is popping, and with the normal consequences.

China didn’t go crazy like Japan or America with printing money.

Yes, they printed some…

But I’ve been sort of amazed to see the constraint that China has had as far as printing money.

I haven’t sold anything, because my view is China is still going to be a great country in my children’s lifetime.

Three Markets Jim Likes: Japan, Russia, and Turkey


Jim:
In Japan, the central bank is buying everything in sight.

You could conceivably have the Japanese market go back to its old all-time high. I own Japanese ETFs.

The reason I own Japanese ETFs is because the head of the central bank buys ETFs every day.

Well, he’s got more money than I do, Kim.

If he’s going to buy ETFs, I’m going to own some too.

I’m not buying them right now, but I own them, and I’m not selling them yet.

Kim:
I know you’ve also liked Russia, and it’s long been one of the world’s cheapest markets. It sounds like you’re still enthusiastic about Russia despite the geopolitical noise right now.


Jim:
I still own Russian shares.

I haven’t sold anything.

And some of my Russian shares have done remarkably well, to my shock.

Russia is one of those rare countries that in 2022 doesn’t have a lot of debt, has huge resources, and isn’t anti-capitalist.

So, no, I still see reasons to be optimistic about Russia, but I’m not buying now.

I haven’t sold, but I’m not buying now.

Kim:
Turkey is kind of a standout in the basket-case political arena, and it’s also one of the world’s cheaper markets. Is Turkey on your radar?


Jim:
Yes, it is. [Turkish President Recep Tayyip Erdoğan]…

Maybe he’s crazy, or maybe he’s right.

Maybe cutting interest rates and making the currency collapse is good for a country during wild inflation.

[Erdoğan has defied centuries of macroeconomic experience and insight to implement monetary policies that contradict what almost every country in history has done when faced with high inflation.]

Nobody else has ever thought that, including me.

One consequence is that the Turkish stock market is very, very, very cheap.

I’m not buying anything.

I’m actually looking at the Turkish ETF that’s listed in New York [iShares MSCI Turkey Fund (TUR)].

That’s probably what I would do before too much longer.

Historically, even I know that if you buy these things when they’re a basket case, if you have the staying power, usually, a few years later, you look like you were smart.

Now, if the basket case turns out to be Cuba in 1960, you weren’t so smart.

North Korea in 1955, you weren’t so smart.

But I don’t think Turkey is going that way."

Source for Part 2:

Investing Legend Jim Rogers Talks Cryptos, Learning From Mistakes

Kim:
Looking at another type of investment… What are your thoughts about cryptocurrencies?


Jim:
Well, a lot of people I know have made a lot of money trading this stuff and I read about them.

I have never bought nor sold any cryptocurrency.

And the reason being, I’m not a trader, I’m a hopeless trader, so there’s no attraction for me.

And as you know, many cryptocurrencies have disappeared and gone to zero.

 There have been hundreds of them.

I’ve got plenty of other ways to lose money

… I don’t have to go use somebody else’s invention to lose money.

The Risks We’re Not Thinking About


Kim:
 When we’re talking about risks… We’ve had COVID-19, and it looks like we’re finally coming out. Well, the developed world is coming out of COVID-19, at least. And we have debt, inflation, potential war in Ukraine… What other risks do you see around the world that investors maybe aren’t thinking of but should be?


Jim:
Isn’t that enough?

Kim:
That’s plenty, for sure.

But there’s always something that we’re not talking about… like, a pandemic.

You know, people knew a pandemic would come around sooner or later, but not too many people thought it would be like it has been, and have such an impact.

And now we’re talking about war.


Jim:
You’re exactly right.

The only potential good news is that we’re all talking about war.

And when everybody is talking about something, it usually doesn’t happen.

You know, you look back at 1914, and the markets kept going up, hitting new highs after the assassinations [that triggered World War I]… even though Europe was about to be destroyed.

And maybe we won’t have a war… I don’t know.

I’m an American citizen, an American taxpayer, and I certainly hope that America doesn’t have to go to war with Ukraine and Taiwan.

If we have a war with Ukraine and Taiwan, that’s a two-front war.

But then the Iranians are going to get in too, so we’re going to have a war on three fronts, and maybe the North Koreans, so four fronts.

I don’t particularly want to be in that war, I assure you, certainly not as an American.

I mean, first of all, we have to pay for it, but I don’t know how America could be very successful in a war like that.

So, maybe it won’t happen since it’s on everybody’s lips.

I worry about many things, but it’s always the unknown that is most worrisome.

On Learning From Mistakes


Kim:
You’re a very successful investor. But what have you learned from your mistakes?


Jim:
Oh, Kim, I’ve made many mistakes.

We can talk about mistakes all day if you want to…

You want to hear about my first wife, what a disaster that was?

I’ve made plenty of mistakes.

I’ve learned more from my mistakes than I have from my successes.

You know, the problem is that when people have success, they always think, “My God, this is easy. I’m so smart.”

No, what you should do then is close the door, close the window, and hide for a while.

Go to the beach or something.

When you start thinking about how smart you are, that usually leads to problems down the road. So, beware of success.

Kim:
Beware and be humble, I guess, is what you’re suggesting.


Jim:
If you’re not humble, the market will make you humble.

At least it has made me humble.

I can remember one of my first mistakes in the market, and I often talk about it at universities.

It was around 1970 or so. I was brand new to the [investment] business.

I mean, I was a kid, I didn’t know anything.

But I suddenly tripled my money after I bought puts on the market [puts rise in value if the market declines], and tripled my money in five or six months.

And everybody was going broke around me…

It was a horrible bear market.

I sold my puts the day the market hit bottom, and I said, “This is so easy, I’m going to be so rich.”

And then three months later, I waited for the market to rally, which I knew it would.

I thought I was a smart kid.

And then I sold short… I took everything I had and sold short.

I was wiped out, lost everything.

By the way, Kim, every company I shorted [that is, bet that they were going to go down in value], six companies, went bankrupt eventually.

 But I lost everything first.

I learned quickly that even if you’re right, you can get wiped out.

Because there are many other players in the market and you have to be aware of all the other players, what they’re doing, and what they’re thinking.

That’s part of the problem with the markets, and part of the joy, and ecstasy, and excitement, but that doesn’t make it easy.

Kim:
Looking out a couple of decades ahead, when you think about the world that your kids and my kids are growing up in, what are the biggest concerns you see – whether political, financial, economic, or environmental?


Jim:
Well, history shows us that no currency has stayed on top as the world’s medium of exchange for more than 100, 150 years.

So, in the lifetimes of our children, the U.S. dollar is not going to be what it has been in our lifetimes.

That’s a concern that I have for them.

Not for me…

It’s a good time to be old, Kim.

We don’t have to pay for all of this.

You know, I’m not going to have to pay any of this staggering debt that the U.S. is incurring.

But unfortunately, our kids are going to be faced with huge problems.

A hundred years ago, the U.K. was the richest, most powerful country in the world…

There was no No. 2.

Fifty years later, the International Monetary Fund had to bail them out.

That’s going to happen.

History is pretty clear about that. So, I certainly worry about it.

I’ve tried to prepare my children for the 21st century, but who knows? I’ve taught them to speak Chinese and to know Asia… but who knows?

For all I know, it’s going to be Venezuela that’s the powerhouse during their lifetime.

I’m sure there will be many surprises." ...

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