Jim Rogers Interview

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Corth
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Jim Rogers Interview

Postby Corth » Mon Dec 01, 2008 7:05 am

I've been following Jim Rogers for quite some time now. He is a legendary investor, best known as the co-founder of Quantum Funds with George Soros. I've posted a couple of interviews in other threads. This one is a lot longer and more comprehensive. To me, the guy is completely spot on with respect to the economic crisis and subsequent bailouts. I disagree with him on education, as he assumes that simply paying teachers higher salaries will imrpove it. He also discusses in length the boom in commodities (which he is famous for predicting in 1999), which he expects to continue (as do I). Also, of particular interest, he discusses the relative economic prospects of the US and Asia. In his opinion, there has been a massive shift of wealth and power from the West to the East in just a short period of time. He put his money where his mouth is. Last year he moved his entire family to Singapore so that his young daughters can grow up speaking Chinese.

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Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth

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Re: Jim Rogers Interview

Postby Kifle » Mon Dec 01, 2008 7:28 am

Corth wrote:Last year he moved his entire family to Singapore so that his young daughters can grow up speaking Chinese.


While most of it seems good, this part right here makes him seem a little creepy.
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Re: Jim Rogers Interview

Postby Corth » Mon Dec 01, 2008 12:18 pm

Thats at least how he describes it in the interview. I think there is an element of symbolism there.. that he is abandoning the US, which to him is a declining power, and moving to the new land of opportunity. He points out that in 1807 it would be smart to move to London. 1907 it would be smart to move to New York. And now, in his opinion, its smart to move to Asia. This is a guy who literally drove around the world on two separate occasions in order to write books on the financial prospects of the countries he visited. Great books too, if only to read it for the travel portion and not the financial/economic parts, which are incidental. To some extent, he is talking his book here.. he moved to the region with the best such prospects.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Jim Rogers Interview

Postby Xisiqomelir » Mon Dec 01, 2008 4:17 pm

I like Jim Rogers a lot (and his youtube interviews owning fools on Bloomberg and CNBC are great), but Singapore has no prospects. Also, he's wrong about Taiwan-China normalizing relations.
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Re: Jim Rogers Interview

Postby Corth » Mon Dec 01, 2008 5:07 pm

I think he is in Singapore because its a little bit easier for a westerner to get accustomed to living there than China. His position seems to be pro-asia in general, and China specifically. Another investor who moved to Asia whom I really respect is Marc Farber, who is a Swiss national. If you have enough money these days, the world is a very small place. There is a growing idea here that the action going forward is going to be in Asia. Remains to be seen.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Jim Rogers Interview

Postby avak » Mon Dec 01, 2008 6:08 pm

I have the day off today, so I listened to the whole damn thing, horrendous audio and all. I've listened to some of his other commentary that Corth has posted...definitely an interesting guy. I have a hard time shaking an underlying distrust due to his self-promotional nature.

So, I have a few concerns. One, he made his money in this so-called broken system and now is bashing it as the dumbest thing around. I cringe at this notion of, 'there has been a long period of excess, so now we must pay.' Is he going to pay? No, he is just fine...may even profit. He asserts that it will mainly be the financial industry that pays...well, I beg to differ. Credit is frozen, so as he even says, farmers can't get the critical operating loans that they need...retailers can't get credit to restock their shelves...he's being myopic and retarded on that point, imo.

Who benefits from this collapse of the current system? Me? Well, eff no. I suffer mightily, along side much of mainstream America. So in two or four years I can look forward to a renewed financial system? That's not very promising when faced with dire straits in the short term.

Rogers also blames just about everyone for this. In one section he blames Greenspan, the general gov't, regulators, and businesses themselves, as well as people that bought homes they couldn't afford. Honestly, he'd fit right in on this forum; bashing everything and everyone and then retorting with an ambiguous platitude like, 'just let them all fail.'

That said, I think he is more right than wrong. I support the notion of making bad business decisions have their consequent repercussions. I also support the idea of restarting the credit flow through recapitalization. Many respected economists look at the lack of support for Lehman as a major mistake in the handling of the crisis. The fact is, we, as a society, can let the institutions fail -and- bail them out at the same time.

I'll link to Paul Krugman's most recent thoughts on the crisis. He argues that a bailout is mandatory and that we can work the details of the broken system out slowly over time. I agree.

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I also liked how Rogers talked about investing in education and infrastructure. More importantly, I think he is mostly right about looking towards tangible goods like ag commodities. Otoh, discounting information technology is stupid.

Thanks for the post Corth.
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Re: Jim Rogers Interview

Postby Corth » Tue Dec 02, 2008 1:02 am

To be fair to rogers, he has been criticizing excesses in the financial industry and mortgage markets for quite some time. He is an investor, true, but he has not capitalized, to my knowledge, from the boom in mortgages and RE, which is where the excesses took place. Except perhaps with respect to selling his property at the top of the market. For nearly 10 years he has been concentrating mostly on investing in commodities generically, and also in Asian equities. In all likelihood he has probably lost a significant amount of his net worth as both of those sectors have crashed hard. I think time will probably vindicate him on both counts.

I'm curious where you get the self-promotional part from. I don't really see it. He comes off as very brusque.. he doesn't suffer fools gladly. Someone geared towards self promotion usually isn't telling half of his potential audience that they are fools and they can go stuff it.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Jim Rogers Interview

Postby avak » Tue Dec 02, 2008 4:42 pm

I get the self-promotional vibe from his knack for drama. You could probably characterize that as just straight talk, but he also has a website, sells books and does a lot of commentary work.

Any thoughts on land as an investment at this point? There had been quite a bit of interest in recent years, driving prices up in most rural areas. I'm wondering if there will be an exodus in this liquidation period though.
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Re: Jim Rogers Interview

Postby Corth » Tue Dec 02, 2008 5:51 pm

I don't really have much of a position on land. If I had to buy RE I'd probably buy farm land. Houses in areas that didn't see a boom won't see much of a bust either.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Jim Rogers Interview

Postby Vaprak » Tue Dec 02, 2008 6:15 pm

Corth wrote:I don't really have much of a position on land. If I had to buy RE I'd probably buy farm land. Houses in areas that didn't see a boom won't see much of a bust either.


Generally history shows that agriculture goes bust about 2-3 years after the start of an overal economic recession. Commidity prices are currently in a normalization period (decline) while input costs, cash rent for farmland, and farm land prices are still trying to level off after they boomed heavily while commidity prices were going up like gangbusters in the previous few years. For 2009 there should be enough carryover grain, commodities sold on futures, and carryover cash from a few great years to hold off those high input costs and land costs. 2010 might be an OK year depending on crop yields, but by 2011 if commidities stay generally where they are now and input costs/cash rent don't adjust downward quickly enough there could be quite a few operations going belly up. Hopefully input costs will go down fairly rapidly since a lot of the input costs depend on oil prices, but I wouldn't bet on it. Shouldn't be as bad as the farm crisis in the 80s as farmers aren't as overlevereged in their land as they were in the 80s. By 2012 I expect land prices and cash rent prices will start to fall again along with input costs and then the cycle can start all over again.

In other words, unless you're planning to actually farm the land yourself or develop it for other purposes I'd shy away from farm land.
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Re: Jim Rogers Interview

Postby avak » Tue Dec 02, 2008 7:31 pm

Huh, thanks Vaprak. That falls in line with most of what I've heard. One factor that you didn't touch on was the current credit freeze. A lot of these guys are completely dependent on huge operating loans that they should be lining up right now. And by huge I mean upwards of a million for regular guys. Another factor is ethanol and looming disaster there. Huge amounts of corn are going to ethanol right now and if that demand dries up there will be way too many acres of corn.

I'm more curious about the positions of big money investors that shifted to land over the last 5-10 years. Land prices in the midwest doubled in ten years. It could be like a vestige of the housing bubble that hasn't popped yet.

and, while I do have a small operation, I'm vastly more interested in being positioned to buy that prestigious 'empty section.' I'm also interested in cattle ranching, but as I have no ranch...and no cattle...I need a shift in the economy to facilitate that.
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Re: Jim Rogers Interview

Postby Corth » Tue Dec 02, 2008 8:47 pm

Your position, Vaprak, is dependent upon commodity prices remaining depressed. As far as I can tell, there is no fundamental reason to expect that. I think you will see that at the current prices, a lot of production is curtailed, and prices will increase again very shortly. Avak raises a good point that some farmers may have to curtail production because they cannot finance their operations. Another reason for commodity prices to ultimately increase on reduced supply. A rule of thumb with commodities is that the cure for cheap prices is cheap prices. I'm expecting agricultural commodities in particular to skyrocket. People don't stop eating in a bad economy, and my understanding is that there is quite a food shortage worldwide.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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Re: Jim Rogers Interview

Postby Vaprak » Wed Dec 03, 2008 2:46 am

Shrug, there is no credit crisis where I'm at. I work at a community bank (I am not a banker). We're still lending out the same huge sums of money to the same farmers who we've always worked with and several more. We have never relied on massive amounts of leverage or trading paper. We take in deposits and we lend them out. No subprime or non-standard mortgages. Business as usual. Some of these guys(not necesarily the largest, but generally the most profitable) don't need to borrow anything much at all this year for operating loans because they've got 1 or 2 million in liquid accounts.

Most of the ethanol plants around here are doing large scale layoffs. Some of them are in bankrupcy proceedings. There are still a few plants being built, but one was just finished and they can't afford to operate it. Ethanol is a bust right now in northern IA and southern MN.

There are some very wealthy individuals around here that are buying up huge tracts of farm land at insane prices. Mostly they're doing it for a temporary tax shelter more than as an investment with any measure of expected return though. They are adding to the bubble-like farmland prices though.

Some commodity prices will go back up, sure. But it's my gut instinct that corn will continue to fall as more ethanol plants go belly up from years of operating at a loss while corn was so high. Hell, VeraSun alone going bankrupt will likely screw up grain contracts on millions of bushells of corn and probably take several small elevators in Iowa down with them. Also farmers in the midwest don't generally curtail production on anything. You've only got one growing season here and you make the best of it. You might see some of the bigger farm operations hold onto their grain for a while if they've got enough bins to wait out the market, but mostly there will still be piles of corn on the streets of small towns that are as large as Giant stadium, just like there are every year. Anyone who worries about a food shortage should come to small-town MN in the late fall just to witness the corn piles. Even when Ethanol was booming there were still piles of corn laying around everywhere out here.
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Re: Jim Rogers Interview

Postby Corth » Wed Dec 03, 2008 5:43 am

When I drove to the outer banks of North Carolina this summer for my vacation, we passed through the Delmarva penninsula. It seemed that every couple of miles had some guy on the side of the road selling watermelons at ridiculously cheap prices. But here's the rub, when I got home to NY and went to the store, those same watermelons were not so cheap anymore. What I'm saying, I think, is that despite the corn shortages of recent years, and it was a shortage, no doubt about it, you still had plenty of it in your neck of the woods where, guess what, there are zillions of acres of the stuff growing. On the other hand, in Mexico there were riots because the price of tortillas more than doubled. Will the ethanol bust change things? Quite possibly in the short term - with regard to corn. In the long term there simply is not enough cheap energy, and not enough available food, for the 6+ billion people on this planet. One thing there will be plenty of is inflation. Commodities are a once in a lifetime buy right now.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth



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