by Jim ROGERS,

International Investor


What I Am Doing About the World Today?

Mr. Rogers’ began his address by commenting on the success of Amundi, which he described as “one of the most astonishing stories I have come across.” Turning to the subject at hand, Mr. Rogers was adamant that a disciplined approach to understanding where the world is coming from, and where it is heading, is fundamental to making the right investment decisions.

After a tremendously successful but brief career in New York, Rogers retired at the age of 37 to travel the world that he had so much success anticipating. On two world tours, one of which took three years and covered 245,000 kilometres through 116 countries, he observed shifting economic and political realities first hand, and his travels have led him to many conclusions regarding the world of today and tomorrow.

Mr. Rogers predicts that the 21st century will be China’s century, in the same way that the 20th was the United States’ and the 19th Great Britain’s. For this reason, he has moved his family to multilingual Singapore, so that his two daughters could grow up speaking both Mandarin and English.

He did acknowledge that China would experience problems. “Right now, they have huge amounts of debt built up. They have not had a recession in 25 years. Most countries have recessions every four to seven years, so China is going to have problems but it is going to come out of those problems just as America did and will become the most successful country in the 21st century,” he asserted.

Speaking on his own portfolio, Mr. Rogers revealed that currently he is short on the US and long on China. “The one reason I long China is because the government is going to let the markets make decisions in the future. From an investment point of view, this is obviously very good for China and for the world,” he said. He also spoke of the US dollar, saying, “I am mainly long on the US Dollar because when turmoil comes in the next two or three years, people are going to flock to a safe haven. They think the US Dollar is a safe haven — it is not but, partly because of tradition, people will go to the US Dollar.” Mr. Rogers said he is also investing in agriculture and in Russia, two incredibly unpopular areas to invest because he reasons we are going to see changes in these areas.

 

Mr. Rogers then sat down with Adrian Dearnell, Founder and COO of EuroBusiness Media, to discuss his views on where we are headed.

   Adrian DEARNELL

Regarding emerging markets, do you think that emerging market benchmarks are relevant today or is each one of these countries such a unique case that trying to talk about emerging market investing through benchmark approach is not relevant?

   Jim ROGERS

I am called the ‘Indiana Jones’ of investing because I have been investing in this market for decades. I never thought of them as a class — I just would find cheap markets. So to answer your question, they are not a class. Each one can be its own disaster or it can be its own great triumph. Therefore, if you are investing in emerging markets, stop thinking that way and find the right ones. In fact, just yesterday I opened my account in Kazakhstan because I hope to be investing there soon. Nigeria, again they have made major changes, in this wave that is going to collapse, that would be an opportunity, so you have to judge them individually, you cannot judge them as a class, or you will not make any money.

   Adrian DEARNELL

Would you advise a young financial investor today to start his career in commodities trading?

   Jim ROGERS

Unless you love finance, I would not advise you to go into finance at all. In fact, we have had long periods where the people who produce real goods were in charge, followed by long periods where financial types were the masters of the universe. I hate to tell you that we have had our 30 years and we are now not going to be in a very good place as a sector. Right now, as you all know, governments all over the world do not like us, they are taxing us, they are putting regulations on us. You know that there is huge debt in the financial community. There was no debt in the financial community when I started. I used to be a student in Oxford, in England, and my professors used to say, ‘what is wrong with you, why are you interested in the stock market? It is a backwater, it is not relevant, nobody cares.’ Now you go to Oxford and every kid there is starting a hedge fund in his room. Everybody is going into finance. In 1958, America produced 5,000 MBAs; the rest of the world produced none. Last year, America produced 200,000 MBAs and the rest of the world produced tens of thousands. Finance is not a good place to be. If you love it, sure, go into finance but, otherwise, I would not go into finance in 2017. We have the wind in our face now.

   Adrian DEARNELL

Having said that, should somebody go into commodities today?

   Jim ROGERS

If you are going into finance, you should go into commodities more than any other, or Chinese finance, as the Chinese have not had a financial industry for a long time, for reasons we all know. Before the Second World War, Shanghai was the largest financial centre in the world between New York and London. It will be again. The Chinese government is doing everything it can to develop a financial industry. Therefore, if you do not like being in finance in the West, either learn to drive a tractor or move to China.

   Adrian DEARNELL

What your thoughts on sustainable investing and decarbonisation?

   Jim ROGERS

I am not investing in either. If you can find sustainable wind power or some of the other alternative energies, yes, you are going to make a huge fortune. The problem is that most of those sources of energy are not competitive with real or natural energy. Now, if you can get subsidies, of course, you will make a lot of money but it is not my style to invest in subsidized industries. I prefer something that is real and competitive.

   Adrian DEARNELL

Let us come to China, which is something that you feel passionately about. Can China be successful without political and social reform?

   Jim ROGERS

Since the first time I went to China, in 1984, the country has changed enormously. There are now over 50,000 demonstrations in China every year and many media outlets. They change the government every five to ten years. Now, maybe your question is will we have revolution and disaster? Suppose they have revolution, they are not going to go toward the left. On the contrary, there will be even more capitalists than there was before.

   Adrian DEARNELL

Again, China decided to alter its foreign exchange policy this year. Do you think a hard landing is unavoidable?

   Jim ROGERS

China is going to have bankruptcies. China has not had bankruptcies for decades but the government has said they are going to let people go bankrupt. Now, I hope they mean it. It will be good for China and it will be good for the world. As I said before, it has been over 25 years since China had a significant economic setback. That is enormously unusual, so the next time around, we are going to have bankruptcies, setbacks, problems, very unhappy people, turmoil and what I hope it will be an opportunity. The Chinese have a wonderful expression, wei ji bu nan, which means opportunity and disaster are the same thing. Whenever there is a disaster, there is opportunity.