Exclusive Interview with Jim Rogers: Inflation Is Coming 68 comments
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In this DailyMarkets.com exclusive, I spoke by phone with legendary investor Jim Rogers who made his fortune with the Quantum Fund, a hedge fund he co-founded with George Soros in 1970. Over the next 10 years, Quantum gained 4200% while the S&P 500 index rose about 47%.
He is also the author of the best-selling books “Hot Commodities”, “Investment Biker” and “Adventure Capitalist”. Rogers, who created the Rogers International Commodities Index (RICI) in 1998, is one of the most closely watched investors. If you are fed up with the Fed, you are not alone. Recently, Rogers said that Paulson and Bernanke should resign for keeping “zombie banks” alive as they should be allowed to fail.
His uncanny accuracy in predicting the recent commodity bull run as well as the financial crisis has made the media, as well as private and institutional investors, sit up and listen to what he has to say about the markets.
Grace Cheng: Do you think the period of forced liquidation has ended or does it still have a ways to go?
Rogers: I’m sure it has not ended. It certainly has not ended for many asset classes and it probably has not ended for most. It may be over for a few things but it still has a long way to go.
As you’ve said many times, the US government is printing a lot of money right now, when do you think inflation will come around and bite us?
Rogers: Well there is inflation now in many things. There’s temporary deflation in raw material prices and in some property. But throughout history, whenever you’ve had gigantic printing of money and spending of borrowed money, it has always led to higher prices. Unless something is dramatic, it’s going to happen again. When? I don’t know. It’s already happening in some things. I don’t know if you’ve bought any sugar recently or some other things, prices are up and that will continue and it will get worse.
You’ve been bullish on commodities for a long time, recently you said you’re buying the Rogers Metal Index. Do you think that the Obama stimulus plan will create more demand for commodities?
Rogers: Well of course, anything that causes a revival of economic activity causes a revival of demand for everything including commodities. I mean if you’re gonna build bridges you’ve got to build them out of something you cannot build virtual bridges you have to build real bridges, etc.
You’ve said that over the long term, the US dollar is doomed. What are your thoughts on the British Pound?
Rogers: More doomed. It will disappear sooner. If it weren’t for the North Sea, the British Pound would have already disappeared. It’s more doomed. The UK has been exporting oil for 26 years; within the decade, the UK will be a net importer of oil again, and they have nothing else to sell to the world once the oil dries up.
Do you think China will scale back on buying US bonds? And if that happens, how will it affect the US economy and the US dollar?
Rogers: Well if I were China, I would scale back. If I were everybody, I would scale back. The US bonds yield virtually nothing, the dollar is a flawed currency, inflation is coming, higher interest rates are coming. I would think everybody would be scaling back including China. We’re going to have higher interest rates down the road because somebody’s gonna scale back. If not China, Japan or Korea, or who knows, somebody.
You’ve been buying Chinese stocks for many years already, now that China’s economy is doing badly and exports are decreasing significantly, what sectors are you looking at in China?
Rogers: Agriculture, water treatment, people who build power generation, people who build infrastructure, tourism. Many areas of the Chinese economy will continue to do well no matter what happens to the world economy. Many will suffer; anybody who sells to Wal-mart or retailers in America is going to suffer, others will do extremely well no matter what.
My last question, on a personal note, do you miss traveling around the world for fun like you’ve done several times before?
Rogers: No, because now I have two little girls and they’re more fun than anything. I hope someday that I will travel around the world with them for fun. But at the moment, watching them grow up and helping them grow up is more fun than anything I can imagine.
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kevin
bullinachinamarket.com
Now when a man with that kind of track record (4200% gain over 10 years) gained from being able to look ahead and read the tea leaves ups and sells all his property and all his dollar holdings and moves to China....well....that should tell you something about the state of America now and in the not too distant future.
Heavy will the crown of Messiahhood lay on Obama's head. The 2012 elections are going to be a site to behold. And the safest place to watch just may be in Jim's living room in China.
Small correction. Mr. Rogers did not move to China but rather Singapore which is a city-state in Asia.
On Jan 15 04:55 PM Sentinel wrote:
> Roger is the only one I know who had the balls to sell everything
> he had in America and move to China.
>
> Now when a man with that kind of track record (4200% gain over 10
> years) gained from being able to look ahead and read the tea leaves
> ups and sells all his property and all his dollar holdings and moves
> to China....well....that should tell you something about the state
> of America now and in the not too distant future.
>
> Heavy will the crown of Messiahhood lay on Obama's head. The 2012
> elections are going to be a site to behold. And the safest place
> to watch just may be in Jim's living room in China.
Mr. Rogers is the kind of guy who not only talks the talk but can walk the walk which is very impressive to me.
I have been to China many times and the growth and free market attitude is so strong that it makes me wonder about the future of the United States and my Children living here.
I get the feeling that most of the people that are making long term choices for us in DC have never worked a day in their life and hold the belief that the US government will never have to stop spending more than it brings in. They for sure don't ever think they will have to pay the bill for what was already spent.
Both of my children can count in Chinese and say some other words as I agree with Mr. Rogers that China now is like America was 100 years ago.
They will become complacent when they get rich, but for the next 50 years, Asian equities are the place to be. Commodities will rule until alternatives come along and some commodities just do not have an alternative, things like Steel
On Jan 15 02:31 PM Larry House wrote:
> I hold Jim Rogers' opinions in high regard. He is quite blunt and
> cock sure, which bothers some, but I think he is usually right on
> has a good handle on the "big picture." I agree with the outlook
> for inflation, but it is impossible to say when. Even Rogers said
> that. Going into commodities now could beat a person to death waiting
> for the inflationary pressures to set in. I think investing to capture
> the rise of inflation will be THE major play at some point in the
> future; there is just no telling if it will come late '09, '10, '11
> or later.
Thanks again.
Oh Nurse....time for my meds!
On Jan 15 06:24 PM Sentinel wrote:
> Thank you Roger for the correction. Of course you are right. I just
> remember him traveling all over China and then heard the news that
> he had pulled up stakes and moved to Asia. Just assumed it was China.
>
>
> Thanks again.
concisetrading.blogspo.../
Ryan
conditions like - We China don't mind Iran to have a atomic weapon, so US stop interfering - condition met? We china will buy in the next year 300 billion of treasuries.
Why would China do this - because in the international tick for tack they will get compensate.
I disagree somewhat on the inflation issue... I firmly believe that our banking system is insolvent and that the hundreds of billions of $$$$ in play at the end of each quarter are shoring-up bad debt. This, believe it or not, could continue on for 10-15-20 years depending on the terms of the loans and when they come due. It's an awful thought... Anyhow, my theory on the lack of lending and no inflation...
He really is on the mark with China -- It will be a lot easier for a producer nation with a surplus to develop a consumer sector, than a debtor nation to redevelop a manufacturing sector. There will be some pain over there too, but nothing like we're going to see in the United States.
I think China will see the writing on the wall and cut the U.S. off, they'll use their reserves to act as a buffer while they realign their economy -- to continue to wean this country would insane.
I value his opinion more than any of the others I see in the media. In a year or so I'm sure Jim will say that the U.S. has a zombie economy -- sad, but true.
NOTE: He has a great book out on his travels by motorcycle that is a great read!
we are in a 15-20 year depression cycle based on credit bubbles and baby boomer demographics...
India may be the other star over the next 50 years...
don't see inflation other than a 6-9 month pop from the stimulus packages..
food and water will always have inflation...oil depends on war and terrorism..
usage of oil is heading way down worldwide...retail, travel, consumption,
dining, construction.....dead in the water and bad for oil...
I saw a projection that oil could come it at $20-25/bbl. That seems to be pricing-in the end of the world as we knew it.
On Jan 15 09:24 PM scotty1560 wrote:
> Curbs-in I agree with your thoughts....
>
> we are in a 15-20 year depression cycle based on credit bubbles and
> baby boomer demographics...
>
> India may be the other star over the next 50 years...
>
> don't see inflation other than a 6-9 month pop from the stimulus
> packages..
> food and water will always have inflation...oil depends on war and
> terrorism..
> usage of oil is heading way down worldwide...retail, travel, consumption,
>
> dining, construction.....dead in the water and bad for oil...
On Jan 15 04:55 PM Sentinel wrote:
> Roger is the only one I know who had the balls to sell everything
> he had in America and move to China.
>
> Now when a man with that kind of track record (4200% gain over 10
> years) gained from being able to look ahead and read the tea leaves
> ups and sells all his property and all his dollar holdings and moves
> to China....well....that should tell you something about the state
> of America now and in the not too distant future.
>
> Heavy will the crown of Messiahhood lay on Obama's head. The 2012
> elections are going to be a site to behold. And the safest place
> to watch just may be in Jim's living room in China.
One small issue is that you will be watching, and undoubtedly hoping for a Republican rebirth, in China alone. Jim lives in Singapore but why permit facts from distorting your reality!!!!
Correction: He was the junior partner in the Quantum fund which returned 4200% in the 1970s. Soros has stated explicitly that Rogers was someone who "did the work of 5 analysts" but in the end ALL decisions were taken by him. The work was clearly split up so that Rogers was the analyst (with a knack for seeing the big picture), and Soros the decision maker. Just go google it. Soros went on to build the bulk of his fortune after Rogers left. This is not to take anything away from Rogers' achievements, but the fact is that there's no easily verifiable track record for him, just a lot of predictions over the years, among which many prescient ones. I recently re-read the 1989 Market Wizards and a lot of his predictions there did materialize, but others didn't. Notably, he was already extremely bearish on the dollar then. As another poster wrote, the problem with this big-picture stuff is in the timing, and you can get your shirt ripped off your back in the mean time. For instance, if a new panic breaks out that we're entering a long-term slump (Japan-style, but world-wide this time), commodity prices could drop a lot further from where they're now (as of now, they're still well above the levels before the whole commodity boom started). For what it's worth, that's how I'm playing it: I expect most commodities to sink further in the short run.
As for China, in the very long term I believe he's right, but given that only 30% of GDP there is domestic consumption (40% exports and the rest capital investment, a lot of it in turn export oriented), that there's a middle class of barely 150 million people there, and that the Chinese are tightening their belts even more now their explosive growth has come to a halt, in the short run things could get very ugly very easily there. I don't think the market has fully factored in what's coming in China yet. Now there's this sense that China is in a much better position, but frankly, I'm convinced recent economic statistics there are hogwash (exports barely dipped where those in Taiwan, Vietnam, Japan fell off a cliff... How?!?) and that in a few months the true extent of the decline will become apparent. China needs to overhaul its entire economy, and this will be the work of at least a generation. Chinese stocks are cheap now, but they could get A LOT cheaper in the future.
lol, what a joke
author of the book 'hot commodities'
really hot, aren't they?
"His uncanny accuracy in predicting the recent commodity bull run.."
lol, then why didn't he predict the crash? how un- uncanny is that?
less drama queen writing please.