There is a good interview on bloomberg today....very good interview... Rogers, Faber Say Fed Rate Cuts Will Spur a Recession (Update2) By Carol Massar and Michael Patterson Enlarge Image/Details Sept. 18 (Bloomberg) -- Interest rate cuts by Federal Reserve Chairman Ben S. Bernanke will spur inflation, cause the U.S. dollar to collapse and help push the world's largest economy into recession, investors Jim Rogers and Marc Faber said. ``Every time the Fed turns around to save its friends on Wall Street, it makes the situation worse,'' Rogers said in an interview from Shanghai. ``If Bernanke starts running those printing presses even faster than he's doing already, yes we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems in the U.S.'' Defaults on subprime home loans have spurred a rise in worldwide borrowing costs and caused losses at investment funds and banks that made bad bets on stocks and debt securities. Bernanke said last month that the Fed will ``act as needed'' to prevent credit market turmoil from jeopardizing the economic expansion. The central bank will probably reduce its benchmark interest rate today for the first time in four years, opting for a quarter-point cut to 5 percent, according to the median estimate of 134 economists surveyed by Bloomberg News. The decision is scheduled for about 2:15 p.m. in Washington. Faber and Rogers said the Fed should raise interest rates to quell inflation and support the U.S. currency. ``The cause of the problems we have today, they are due to artificially low interest rates, expansionary monetary policies and extremely rapid credit growth that was fueled by a totally irresponsible Fed,'' said Faber, who oversees about $300 million as managing director of Hong Kong-based investment advisory company Marc Faber Ltd. ``It's suicidal to cut interest rates.'' `Stop Inflation' ``They should do something to stop inflation as soon as they can,'' said Rogers, the 64-year-old chairman of Beeland Interests Inc. ``If you don't do something now, if you don't nip it in the bud, it gets much worse down the road.'' Fed funds futures contracts show a 50 percent chance that the central bank will lower its benchmark rate to 4.75 percent from 5.25 percent. Traders are certain of a cut of at least a quarter point. Futures indicate a rate of 4.5 percent by year- end. Fed officials have said the central bank doesn't want to be seen as caving in to funds that piled into the market for securities linked to subprime mortgages, those made to borrowers with poor or limited credit histories. Sell Dollars, Bonds ``It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions,'' Bernanke said in an Aug. 31 speech in Jackson Hole, Wyoming. Rogers, who predicted the start of the global commodities rally in 1999, said investors should sell U.S. dollars and bonds. He said he's selling short shares of investment banks and expects them to fall further. The Amex Securities Broker/Dealer Index has declined 7.2 percent this year, compared with a 4.1 percent gain for the Standard & Poor's 500 Index. Short selling is the sale of stock borrowed from shareholders in the hope of profiting by repurchasing the securities later at a lower price. Rogers said he is buying agricultural commodities and recommended investors purchase Asian currencies including the Chinese renminbi and the Japanese yen. Faber, publisher of the Gloom, Boom & Doom Report, said he is buying gold. `Ballistic' Gold ``Gold is very cheap even at over $700 compared to many other commodities and also compared to many other assets in the world,'' he said in an interview from Hong Kong. ``If the Fed cuts interest rates by a half a point, I think it will go ballistic, I think it will go up a lot.'' The dollar fell to a record low of $1.3927 per euro on Sept. 13. The U.S. currency has since recouped some of its losses and traded at $1.3881 per euro at 9:01 a.m. in New York today. The dollar traded at 115.62 yen. Gold futures for December delivery rose 0.3 percent to $726 an ounce in New York. The price earlier reached $730.50, the highest since May 12, 2006. Before today, gold had climbed 13 percent this year. Rogers co-founded the Quantum Hedge Fund with George Soros in the 1970s. He traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.'' Faber told investors to bail out of U.S. stocks a week before the 1987 Black Monday crash, according to his Web site. He also told investors to buy gold in 2001, before it more than doubled. Last month, Faber said U.S. stocks are at the beginning of a bear market in which benchmark indexes may fall more than 30 percent. The Dow Jones Industrial Average has since gained 1.2 percent.
I can't believe Rogers blew out his scheduled interview with Bullz'n'Bearz for one with Bloomberg....
Interview I did with JR in 2005. Decide for yourself. surf This week I was honored to be joined by a true icon in the world of finance, Jim Rogers. Jim started with humble beginnings and became one of the top money managers of all time. He is an inspiration to people the world over who yearn for adventure and celebrate the human spirit. This article will start out by providing Jimâs background, his basic investing philosophy and then delve deeper into his mind via our conversation. Itâs important to note that he stressed that he is not a trader, but rather believes in waiting patiently until the perfect time to buy or sell appears. He states that most people need to be playing all the time; this is their downfall according to him. He also believes that his flexibility to buy anything around the world is the other key to success. Jim started in the markets in 1968 with just $600.00. In 1973, he was fortunate enough to meet George Soros with whom he started the Quantum Fund. Jim was the analyst at the fund with George being the trader. This partnership proved to be a super success with gains approaching 4000% while the SP 500 gained a measly 50%. Jim was able to retire at age 37 to follow his passion for adventure and investments. His first worldwide adventure involved riding a BMW motorcycle 100,000 miles across 6 continents. This trip is chronicled in the book âInvestment Bikerâ. In 1999, he began the âMillennium Adventureâ where he and his fiancée, Paige (now wife) drove around the world in a custom built Mercedes convertible. Jim documented every stage of this journey on his website www.jimrogers.com and book âAdventure Capitalistâ. His passion for investing has led to the creation of âThe Rogers International Commodities Indexâ and matching fund. This fund has had the best performance record of any fund, regardless of class, over the last several years with returns approaching 170 %. His latest book âHot Commoditiesâ focuses on the coming monster bull market in commodities. He believes that the time is perfect to go long the commodities we use daily. Things like sugar, cotton, corn and oil are poised to follow thru or begin a bull market that should last for the next 10-20 years. Letâs get started with the interview! . How are you today Jim? Jim: Doing just fine. Dave: First I want to start by getting a little of your history. I know you started at five years old selling peanuts. Jim: I did in fact. I grew up in a small town in Alabama. There wasnât much money there, so we all started working pretty early. I worked for a concession in the small town. Later I got the concession, sold peanuts and soft drinks. That was my first venture. Dave: Talk about humble beginnings. I know you went to Yale, and then hooked up with George Soros. Jim: Yes, I went to Yale, was in the army, and then met George Soros in 1970. Dave: That is a stroke of luck, how did you manage to meet Mr. Soros? Jim: I donât recall. I believe someone introduced us. I think he was looking for someone to work with him and I was looking for a job, so it worked. Dave: You have a new book out called Hot Commodities, what is the basic premise of the book? Jim: Well, people donât know much about commodities and they think they are unclean. Basically the book is an attempt to explain commodities to people. I try to explain that commodities are an easy way to invest and a safe way to invest if you do your homework. You will also make more money in commodities than you will in stocks and bonds. If I am correct, we are in one of many periodic bull markets in commodities and it is going to last another ten to twenty years and people should be aware of it. Most people who donât know about commodities run for the hills when you talk about commodities. Dave: For a stock trader, someone who doesnât know anything about commodities but knows about stocks, are there any similarities between the two? Jim: Well, just because someone has heard of a stock, or has bought a stock does not mean they know what they are doing. Commodities are much simpler than stocks. Letâs take copper for instance. When there is too much copper itâs going to go down, when there is not enough copper itâs going to go up. Itâs very simple. When you are going to buy a stock, you have to worry about management, the stock market, the government, environmentalists, unions, regulations, world affairs, and 100 other things. Copper is really simple, its either going to go up or down. If copper goes up, copper stocks might not go up because of all the other things I mentioned which can cause complication. So in short, commodities are a lot simpler than stocks. Dave: Looking at your Rogers International Commodities Index and I noticed that oil has the heaviest weighting at 35%. Why? Jim: Well, if you look around you oil is the most important commodity in the world. Just looking around the room where you are, there probably isnât a lot of orange juice in that room but there is an abundance of oil. You got to that room by energy. There is electricity. There is a telephone, which came from and runs on energy. The carpet was made from energy. Energy is everywhere and it is the most important commodity in the world. Dave: Wheat is your second heaviest weighting at 7%. Can you explain this? Jim: Sure, most people in the world eat some wheat and get some one way or another. Bread comes from wheat for the most part. Wheat and food is very important and in my mind wheat is the single most important commodity traded in the world. Dave: Do you ever adjust the weighting in your Index fund? Jim: Well, if we had to yes. I wanted an Index that was transparent, consistent, and stable. I wanted to know what I was investing in. So far there have been minimal changes. Now if we found out wheat causes cancer, the wheat market would dry up, and it would drop off. If we found out orange juice cures cancer it would get a larger weight because the volume would skyrocket. If oil became obsolete, of course it will disappear, and we will adjust. Now the Goldman Sachs index has 73% energy right now, but more importantly it changes wildly every year. In my book I have the annual changes in the Goldman Sachs components and its just wild. If we are talking about my money, I want to know what I am investing in. In the Goldman Sachs index you donât have a clue what you will be investing in next year, and worse if it goes up Goldman Sachs buys more of it. That is not the way most investors work. Dave: How much capital do you have in your fund right now? Jim: Several hundred million dollars. Dave: What is the minimum for an investor? Jim: For a retail investor its $10,000. For a qualified investor itâs $500,000 with lower fees and lower commissions. Dave: What have the returns been since the inception of the fund? Jim: We are up about 170% since 1998. It has outperformed everything in the world, every index in any asset class. Itâs not because of me, itâs because itâs an index fund. The point is that commodities are in a bull market and that has been the place to be, it is the place to be, and it will continue to be the place to be. Dave: I know a while ago you were pretty bearish on the dollar. Are you still bearish on the dollar? Jim: Well the dollar has been pounded. I read an article a couple years ago that talked about why the dollar was going to collapse. Anything that goes down that fast that much should rise. So it would not surprise me if it did rally. I am not a trader so itâs not a prediction. But if and when it rallies for a few days, weeks, months, or a year or so, Iâm not sure how it's going to rally, I would sell it because the dollar is in terminal decline. Dave: Do you see a potential intervention in the dollar? Perhaps the Federal Reserve stepping in and supporting it? Jim: Well they might try. It would have to be a foreign government because our Federal Bank doesnât have any money so they couldnât support it. Our cash reserves are something like $70 billion, while $2 trillion gets traded every day in the currency market. Our $70 billion would be gone in about six to eight minutes. If someone does intervene they know the dollar is so fundamentally unsound, there isnât much they can do other than a temporary or short-term basis. Dave: Do you feel the same way about the Euro, or do you feel the Euro is a bit safer? Jim: Well the Euro is less flawed than the dollar and its fundamentals are much better. I own the Euro but donât expect it to survive 15 years from now. However, it is less flawed then than the dollar. Dave: Do you use technical analysis at all? Jim: No, its pretty simple just figuring out what is going on in the world. I try to find things that are cheap and invest in them if I see some positive change coming. I donât understand the charts. Donât misunderstand me, I do look at the charts, but I only look at a simple long-term chart to see what has happened over the last 15 years or so, not to tell me what is going to happen in the future. For example, if I am looking at sugar, I want to know the high, the low, when, why, and things like that. I look at the charts to educate me, rather than a predicting tool. !
Dave: In 2002 you completed the Millennium adventure. Did that trip change your perspective? Jim: My trip was three years around the world, 116 countries, and 152,000 miles later. Sure it changed my perspective. It made me want to simplify my life. It made me want to have a child. It changed a lot of things. Dave: On a lighter note, I know you took an assortment of CDs with you on the trip. Can you tell us a little bit about the music you played on the journey? Jim: Well the list is on my website. I donât recall the exact names anymore but some were Mozart, Beethoven, the Fine Young Cannibals, Willy Nelson, and others. Dave: Wow, pretty eclectic tastes in music. Getting back on track here, I know you have a strong opinion about the US tax code. Can you fill me in? Jim: Sure, the US tax code is a disaster. Forget the philosophy behind the code, but the actual code itself. With tens of thousands of pages, nobody has a clue what it says. That includes the IRS and the government. You call up the IRS and ask them a question they will say to you, âWe will give you our opinion, but you canât hold it us to it.â Itâs because they donât even know what it says. It is a minefield. A disaster of boggling proportions. Dave: Letâs talk about the underlying philosophy of the US Tax Code. Why is it flawed? Jim: the philosophy behind it is that we discourage savings and investing in this country, and we encourage consumption. If you earn money you pay taxes on it. Then you put the rest in a bank, and they will make you pay taxes on your interest. If you buy a stock, they make you pay taxes on the dividends. Remember the company has already paid income taxes as well. Then you have to pay taxes on the dividend on the money you have saved and invested. So you are already taxed several times. Then if you have capital gains, you have to pay taxes again. Later in life you will get social security and pay taxes on that money. Now remember Social Security was designed to take your money away from you and hold it in reserve for when you retire and then they give it back to you. They are giving you back your own money but they are making you pay taxes again. God forbid you should die, because if you do you really pay some taxes. Now this is money you have saved, you have invested; you have paid taxes on five, six, or seven times by now. Other countries donât do it this way. They encourage people to save and invest. They donât tax savings. They donât tax investments. We need to change our tax code dramatically.
Dave: Wow, pretty eclectic tastes in music. Getting back on track here, I know you have a strong opinion about the US tax code. Can you fill me in? Jim: Sure, the US tax code is a disaster. Forget the philosophy behind the code, but the actual code itself. With tens of thousands of pages, nobody has a clue what it says. That includes the IRS and the government. You call up the IRS and ask them a question they will say to you, âWe will give you our opinion, but you canât hold it us to it.â Itâs because they donât even know what it says. It is a minefield. A disaster of boggling proportions. Dave: Letâs talk about the underlying philosophy of the US Tax Code. Why is it flawed? Jim: the philosophy behind it is that we discourage savings and investing in this country, and we encourage consumption. If you earn money you pay taxes on it. Then you put the rest in a bank, and they will make you pay taxes on your interest. If you buy a stock, they make you pay taxes on the dividends. Remember the company has already paid income taxes as well. Then you have to pay taxes on the dividend on the money you have saved and invested. So you are already taxed several times. Then if you have capital gains, you have to pay taxes again. Later in life you will get social security and pay taxes on that money. Now remember Social Security was designed to take your money away from you and hold it in reserve for when you retire and then they give it back to you. They are giving you back your own money but they are making you pay taxes again. God forbid you should die, because if you do you really pay some taxes. Now this is money you have saved, you have invested; you have paid taxes on five, six, or seven times by now. Other countries donât do it this way. They encourage people to save and invest. They donât tax savings. They donât tax investments. We need to change our tax code dramatically. Dave: If you were in charge of changing the tax code right now, what would be the first thing that you do? Jim: I would abolish the income tax. We donât need the IRS and we donât need an income tax. We should have a consumption tax. This would save billions of dollars on bureaucrats, tax lawyers, accountants. We would save hundreds of millions of hours of all of us trying to figure out our taxes. The country would be amazingly more efficient, and we would be discouraging consumption. If you didnât consume you wouldnât pay any taxes. If you saved all your money you wouldnât pay any taxes, so it would encourage people to save. Dave: Wrapping up, do you have any advice to our members who may be just graduating from college now and want to get into trading, finance or the markets? Jim: Well my advice would be to take a job in research somewhere where you can spend time maturing and finding out how it all really happens. You may find that you are better at trading, and you donât need any research. However, I would spend some time working for someone as an assistant analyst to learn how it is done. I would also suggest that they get a mentor and not just go in with both feet by themselves. In other words, to work for someone else because even if they are bad, at least you will learn why he is bad, and in turn learn how to be good. Dave: Well, Jim, We are out of time, itâs been an honor speaking with you Jim: Thank you, letâs do it again sometime. As an end note, I gained several basic investing principles from my research and conversation with Jim Rogers. They are: 1. Be patient--- This is most difficult for traders. Jim believes that one of the keys to success in investing is waiting for the perfect time to strike. The urge to constantly be trading causes many to fail. 2. Expand your horizons--- Look outside of your comfort zone for opportunities. Donât just be a âone trick ponyâ. If you trade stocks, start looking at commodities and vice versa. Jim travels the world searching for the next market to invest . We can all perform a version of this by keeping our eyes and ears open for any potential opportunity 3. Use Fundamentals--- Jim doesnât trade with Technical Analysis and charts. Yes, he Looks at charts to see what has happened in the past, but does not use them to project the future. He only invests in things that have strong fundamental reasons to be trending. 4. Think long term ---- Many investors have too short a time period for their investments to perform. Jim rarely even changes the commodity weightings in his fund, preferring to ride the trend as far as possible. This conviction has resulted in him managing the number one performing fund in the world. 5. Utilize common sense--- When I asked Jim why he believes that commodities are going to be the next monster bull market, he responded by saying its common sense. This response threw me off track for a bit until I realized the brilliant simplicity of his statement. He followed up by asking me to look around the room and observe the different objects seeing what they were made of. I saw things made of copper, oil, and wheat among other commodities. Everyone uses commodities in some fashion and they are in limited supply. As Jim would say, âItâs common sense.â .
I would be the last person on earth to criticize his results but these threads keep popping up like he is the emperor of trading, we all know there is commodity inflation, unless you are blind. As explained before ad nauseum his style is long term commodities bull and let's not forget he's got some of the deepest pockets around, those extra zeroes really help when those margin calls are lining up!
My understanding is that he doesn't utilize margin. That said, yes, we can all see the commodities bull market. However, how many folks do you suppose saw it back when he first saw it? Finally, he certainly has never claimed to be the "emperor of trading". In fact, I would say he's not a trader at all. He's an investor. OldTrader
I like Rogers because he's a contrarian that actually puts his money where his mouth is. Too many bears that trade odd lots or are paper traders. At least Rogers is for real. When he says he's bullish Cotton and bearish on brokers then he's long CT futures and short brokers.