Jim Rogers on bargains and excesses
For anyone interested in investing, I ran across this fascinting interview with Jim Rogers, who early in his career achieved a 4000% return in 10 years. In my opinion, he is one of the sharpest investing minds I have ever read. He has a gift for seeing the 'big picture' and macro trends. Some choice excerpts from the interview:
I continued to buy every share that comes public and I have reinvested all my dividends and sent more money to Botswana. The country has continued to develop - it's one of the most well managed, democratic, solid countries in the world. It's one of the better ones in the world as far as I'm concerned. The stock market has gone up many times. That's one that I've been very, very pleased with.[...]
Well, if you've read everything I have written and broadcast in the last five years including my latest book, which is called Adventure Capitalist, you'd know that I have explained that the bear market in stocks was beginning and the bull market in commodities was beginning. We started a commodities index fund on August 1, 1998, because I felt that a bull market in commodities was beginning and the bear market in stocks was beginning. That index fund is up 95% since then. I think you probably know what's happened to stocks since then.[...]
Just an example, you may remember Japan in 1989 and 1990 when the Japanese average was at 40,000. Well, the Japanese average today is about 9,000, up from 7,000 two months ago. The Japanese mutual fund industry has lost 95% of its assets in that period of time. That's not a typo. They have lost 95% of their assets. That's a bear market. If you have that kind of suffering and pain, that's when the system will be cleaned out and that's when you can have a new bull market in stocks. So I'm shorting the financials. I'm shorting us. I'm shorting you and me. Fanny Mae FNM -- I mean that's one of the names I mentioned; I'm shorting money managers; I'll probably be shorting some of the brokers soon. That's where the excesses are. Citibank (NYSE:C - News) will be a short -- I'm not short it at the moment -- that will be a magnificent short. Those will be the places to be.[...]
The US dollar is a terribly flawed currency. We owe over $7 trillion -- I mean I hate this -- I don't particularly like this at all but as an investor one has to invest with reality, not with what one would like. We are the largest debtor nation the world has ever seen. Our foreign debts exceed the foreign debts of every debtor nation in the world put together. The dollar has started going down but it has a long way to go before it's over. And the official policy of the US Federal Reserve is now to debase the currency. They have announced it. They have put it in their minutes. Every one of the governors has made a speech saying, "Yes, we're going to debase the currency. It is our policy. We are going to drive the value of the dollar down and the price of things up. What more do you need to know? You've got to sell dollars. It's a horribly flawed currency anyway, with unsound underpinnings. The debt is increasing at the rate of over $500 billion a year, and the Central Bank is debasing it -- out of official policy.
I hate it - it has never been good for a country to debase a currency. It has never worked in the long run. It has always been a disaster in the long run. It sometimes has worked short-term. What more do you need to know? You've got to sell dollars. The problem is, of course, that there aren't many sound currencies left in the world anymore. I own 12 or 15 currencies around the world. I look every day for a sound currency.
Everybody's learned to debase their currency, to buy votes, to beggar thy neighbor.