Jim Rogers: The Investment U Interview
In Part One of the Investment U interview, Jim discusses the primary influences for his recent book, the signals of a potential bubble in the commodities markets, and why the twenty-first century belongs to China…
Garrett Baldwin: The book is A Gift to My Children: A Father’s Lessons for Life and Investing. Where did you find the time to write such a reflective piece on life and investing?
Jim Rogers: It was really just put together over a life, having made many mistakes and having a periodic few successes in my life. It took a lifetime to make all those mistakes and figure out how things work.
The book started when a Japanese reporter once asked me, “What are you teaching your daughter?” And she wrote an article explaining what I was teaching my daughter. She did that again and again.
The next thing you know, she had a dozen columns or so about things I had said. After reading those columns and reflecting on them, I started making it into a book. It was first published in Japan. The American version is much more extensive.
Garrett Baldwin: You start with the message: “Swim your own races.” How has that lesson helped you, both as an investor and, as you put it in the book, “a citizen of the world?”
Jim Rogers: Well, I, probably like many other people, always assumed that [everybody] else knew more than I did, and so I would try to copy or mimic other people, or at least think about how other people were doing things.
But eventually I realized when I listened to someone who I thought knew what he’s talking about, but I disagreed with him, it turned out that I was right and he was wrong. After that happens enough times, you start to realize, “Maybe I should listen to myself instead of [everyone else].” That gave me the insight and the confidence to swim my own race.
Garrett Baldwin: You state that the more ridiculous the investment idea, the better it is for the contrarian investor. So what seems ridiculous but also high potential on your radar?
Jim Rogers: Well, U.S. government bonds are awfully ridiculous. They have been for a while. It takes a while for a bubble to blow up. But [U.S. bonds seem] to be a bubble. Imagine lending money to the United States government in U.S. dollars for three or four or five or six percent. You pick the number because when a country goes bankrupt, eventually the interest rate goes to staggeringly high levels. And that’s going to happen in the United States.
Another bubble I see is American tertiary education, but I don’t know any way to short either Harvard or Stanford. English and European football teams are a bubble, but I don’t really know any way to short those, either. There are always bubbles in the world, but the one that I’m planning to short next is the U.S. government bond market. The long-bond market.
Garrett Baldwin: Do you believe that QE3 and QE4 are inevitable?
Jim Rogers: I do think that they will stop QE2 just because they have so much publicity on the fact that they’re going to stop it. But something will come back. They may call it something else. They may try to disguise it, but something is going to come back.
You’re not going to see American politicians, especially in an election year, saying, “Well guys, we made horrible mistakes over the past 40 years. Now we have to pay the price and suffer.” No, no. They’re not going to have that kind of platform in 2012. So something will come along to replace QE2.
Jim Rogers on Bull Markets Ending in Bubbles or Hysteria
Garrett Baldwin: In the book, one of the key messages was, “Don’t ignore the bear.” So as a contrarian investor, if everyone becomes a commodities bull, at what point do you look at the market and become a bear? What are the signals?
Jim Rogers: Most long bull markets end in hysteria or in bubbles, and my expectation is that this one will, too. But when you say everybody is a bull, I mean, how many people do you know who buy wheat or zinc or even silver?
I was speaking at a conference not long ago and the moderator asked a group of 300 or 400 international fund managers, “How many of you ever owned gold?”
Seventy-six percent of them had never owned gold. And if you’d asked how many owned soy beans, God knows it would have been zero percent.
So when you say everybody’s bullish, who are these people? Where are they? Maybe they’re bullish, but there are very, very, very few people who have invested in a manner that reflects their bullishness. The last time I was in the United States, I saw shops everywhere saying, “We Buy Gold.” The public’s dumping their gold into these shops. Eventually, those shops are going to have signs outside saying, “We Sell Gold,” and people will be lined up to buy gold. But those days are far from here yet.
So where are these bullish people? If they’re bullish they’re sure not putting their money to work.
Not yet anyway.
For Remainder of Interview:
http://www.investmentu.com/2011/May/jim-rogers-interview-part-one.html
In Part One of the Investment U interview, Jim discusses the primary influences for his recent book, the signals of a potential bubble in the commodities markets, and why the twenty-first century belongs to China…
Garrett Baldwin: The book is A Gift to My Children: A Father’s Lessons for Life and Investing. Where did you find the time to write such a reflective piece on life and investing?
Jim Rogers: It was really just put together over a life, having made many mistakes and having a periodic few successes in my life. It took a lifetime to make all those mistakes and figure out how things work.
The book started when a Japanese reporter once asked me, “What are you teaching your daughter?” And she wrote an article explaining what I was teaching my daughter. She did that again and again.
The next thing you know, she had a dozen columns or so about things I had said. After reading those columns and reflecting on them, I started making it into a book. It was first published in Japan. The American version is much more extensive.
Garrett Baldwin: You start with the message: “Swim your own races.” How has that lesson helped you, both as an investor and, as you put it in the book, “a citizen of the world?”
Jim Rogers: Well, I, probably like many other people, always assumed that [everybody] else knew more than I did, and so I would try to copy or mimic other people, or at least think about how other people were doing things.
But eventually I realized when I listened to someone who I thought knew what he’s talking about, but I disagreed with him, it turned out that I was right and he was wrong. After that happens enough times, you start to realize, “Maybe I should listen to myself instead of [everyone else].” That gave me the insight and the confidence to swim my own race.
Garrett Baldwin: You state that the more ridiculous the investment idea, the better it is for the contrarian investor. So what seems ridiculous but also high potential on your radar?
Jim Rogers: Well, U.S. government bonds are awfully ridiculous. They have been for a while. It takes a while for a bubble to blow up. But [U.S. bonds seem] to be a bubble. Imagine lending money to the United States government in U.S. dollars for three or four or five or six percent. You pick the number because when a country goes bankrupt, eventually the interest rate goes to staggeringly high levels. And that’s going to happen in the United States.
Another bubble I see is American tertiary education, but I don’t know any way to short either Harvard or Stanford. English and European football teams are a bubble, but I don’t really know any way to short those, either. There are always bubbles in the world, but the one that I’m planning to short next is the U.S. government bond market. The long-bond market.
Garrett Baldwin: Do you believe that QE3 and QE4 are inevitable?
Jim Rogers: I do think that they will stop QE2 just because they have so much publicity on the fact that they’re going to stop it. But something will come back. They may call it something else. They may try to disguise it, but something is going to come back.
You’re not going to see American politicians, especially in an election year, saying, “Well guys, we made horrible mistakes over the past 40 years. Now we have to pay the price and suffer.” No, no. They’re not going to have that kind of platform in 2012. So something will come along to replace QE2.
Jim Rogers on Bull Markets Ending in Bubbles or Hysteria
Garrett Baldwin: In the book, one of the key messages was, “Don’t ignore the bear.” So as a contrarian investor, if everyone becomes a commodities bull, at what point do you look at the market and become a bear? What are the signals?
Jim Rogers: Most long bull markets end in hysteria or in bubbles, and my expectation is that this one will, too. But when you say everybody is a bull, I mean, how many people do you know who buy wheat or zinc or even silver?
I was speaking at a conference not long ago and the moderator asked a group of 300 or 400 international fund managers, “How many of you ever owned gold?”
Seventy-six percent of them had never owned gold. And if you’d asked how many owned soy beans, God knows it would have been zero percent.
So when you say everybody’s bullish, who are these people? Where are they? Maybe they’re bullish, but there are very, very, very few people who have invested in a manner that reflects their bullishness. The last time I was in the United States, I saw shops everywhere saying, “We Buy Gold.” The public’s dumping their gold into these shops. Eventually, those shops are going to have signs outside saying, “We Sell Gold,” and people will be lined up to buy gold. But those days are far from here yet.
So where are these bullish people? If they’re bullish they’re sure not putting their money to work.
Not yet anyway.
For Remainder of Interview:
http://www.investmentu.com/2011/May/jim-rogers-interview-part-one.html
