What do you think about what Jim Rogers has to say?

One can think of Rogers whatever one wants but two things are undeniable:

1. He made money unlike many many other talking heads. I read somewhere he has a net worth of $200m. Surely others have fared better than him, but then again, many many others did a lot worse.

2. He has brass balls. Yes, he made a lot of bad calls but he also is very patient and actually trades what he calls. I hate those talking heads that says to short this and short that and never take a position. At least Rogers puts his money where his mouth is.

 

He also has a much more developed worldview than most.

Spend close to 5 years touring the world by motorcycle and car and see if you look at things the same way.

 

What a classic post there surf. Pushing his agenda. Yeah, I guess he's telling you he's bullish on commodities, bearish on the dollar, just as he has been for quite some time. So what? He's been saying many of the same things for the last 10 years.

He's been "very wrong in the past". Yeah...hello? Do you know anyone, anywhere that invests money that hasn't been wrong at times? Including you? He's also been very, very right in the past too. This commodities thing is but the latest example of that.

He's 100% wrong? I love it. I suppose this statement is just made for our benefit out of the goodness of your heart eh? LOL. And YOUR track record would be what? Your hero Neiderhoffer's record would be what? Last I noticed, you were short oil from much, much lower prices. Would that be one of those trades where you were 100% wrong?

I think it goes without saying that you should always be cautious about trading off of anyones investment advice. Rogers himself repeatedly says that regarding his own advice. Again, his advice is long term, not short term where YOUR trading is focused.

OldTrader

 

i had a long chat with jimmy back in 2005. he is a nice guy, but is more of a promoter now than anything. he conducted the interview while running on a treadmill. that was a first for me!

if you still think he is a genius after reading this----- not much more i can do.



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 wasn’t 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 don’t 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 don’t 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 don’t know about commodities run for the hills when you talk about commodities.


Dave: For a stock trader, someone who doesn’t 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. Let’s take copper for instance. When there is too much copper it’s going to go down, when there is not enough copper it’s going to go up. It’s 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 isn’t 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 don’t 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 it’s $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. It’s not because of me, it’s because it’s 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 it’s not a prediction. But if and when it rallies for a few days, weeks, months, or a year or so, I’m 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 doesn’t have any money so they couldn’t 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 isn’t 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 don’t 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 don’t understand the charts. Don’t 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 don’t 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, ‘We will give you our opinion, but you can’t hold it us to it.’ It’s because they don’t even know what it says. It is a minefield. A disaster of boggling proportions.


Dave: Let’s 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 don’t do it this way. They encourage people to save and invest. They don’t tax savings. They don’t 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 don’t need the IRS and we don’t 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 didn’t consume you wouldn’t pay any taxes. If you saved all your money you wouldn’t 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 don’t 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, it’s been an honor speaking with you


Jim: Thank you, let’s 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. Don’t just be a “one trick pony”. 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 doesn’t 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, “It’s common sense.”

 

I agree that these are complicating factors. But in fairness I think it should be pointed out that these are complicating factors for virtually any investment.

A tech stock for instance is going to pay 0 dividend (and therefore has a carrying cost). Your return is going to be diminished by inflation, etc etc.

Rogers has suggested various alternatives in the past, such as investment in Midwestern farmland where you could have grown crops to create an income, or perhaps leased your land to someone. Farmland in recent years has exploded. I also recall his recommendation a number of years ago where he was bullish on sugar, to buy a seat instead, which of course could have been leased to create some income.

This index fund he created has one technique of buying futures and then holding large amouts of cash in interest bearing securities, I presume in an effort to offset some of the carrying cost.

That said, I'm sure his suggestions are not for everyone.

OldTrader

 

Yeah, surf, I read your interview prior to this. If I may say, I thought it was a lousy interview. You had one of the better investors in the world available and you asked shit. LOL. I'd say the interview revealed that your talents don't lie in the interview field.

That said, I didn't say he was a "genius". I think he's a first class investor. I think that's an important distinction since most of the "genuises" I know have either lost their ass, or have unremarkable investment records.

I don't think your assessment of Roger's as a "promoter" is accurate. I think he "promotes" his ideas...true. We all do that don't we surf? But I think an accurate portrayal of Roger's goes far beyond "promoter".

Thanks for your attempt to "protect" me surf. You failed, but it's not your fault. LOL.

OldTrader

 

Great post OT. Everybody is promoting something, it's a pointless criticism. I guess Jim Rogers, Sykes and Surf are all in the same category because they are self-promoters?

 

right or wrong...

I'll be happy to swap bank books with Rogers

 

sorry you didnt like the interview. it was brutal asking questions when he was jogging. im talking about jimmy now, not in the past-- the worst is when he told me to buy orange juice, since it is in everyone's refrigerator---- seriously, how can you respect answers like these, let alone expect better questions given the nature of the chat?

surf