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发信人: stockdemon (返璞归真), 信区: Investment
标 题: An Interview With Jim Roger, August 13, 2008
发信站: BBS 未名空间站 (Sun Aug 24 00:13:21 2008), 站内
【 以下文字转载自 Stock 讨论区 】
发信人: DDM (Buena), 信区: Stock
标 题: An Interview With Jim Roger, August 13, 2008
发信站: BBS 未名空间站 (Sat Aug 23 23:30:50 2008)
An Interview With Jim Roger
In February of 2005, I had the pleasure of meeting commodity investor Jim
Rogers. It was not an official interview. We spoke for 20 minutes as I drove
him in my car to my office. He then spoke to me and my colleagues. He
regaled us with his fascinating life story for about 20 minutes, and then
answered our questions for almost two hours. The questions were not prepared
in advance. Given what a forward thinking individual Jim Rogers is known to
be, it is no surprise that in 2007 his answers are still current. I also
communicated with him in August of 2007 to verify the accuracy and relevance
of the interview.
Rather than retell his exciting life story, I encourage people to check out
his website www.jimrogers.com. He has traveled 152,000 miles, visited 116
countries, traveled the world twice over five years, and at age 60 became a
father for the first time. There are many people that can speak with some
authority about stocks. For an education in commodities, the first person
everybody should learn from is Jim Rogers.
Before the Q & A, he offered various insights on random subjects.
“I have been to 116 countries, and many of these countries are run by
dictators and Mafiosos. They are driving Mercedes’, not Chevys.”
“Most people have never met a foreigner. Americans have, but most people
have not. They like us. They do not necessarily agree with our government
policies, but they are happy to see us. When a new person visits them, they
are excited.”
“Chinese people save or invest 35% of their income. Americans save or
invest only 2%. The dollar is plummeting, so Americans had better be
prepared to learn Chinese.”
“The bull market in commodities began in 1998. Bull markets in commodities
last between 15 and 23 years, with the average run being 18 years. This bull
market in commodities should last until between 2014 to 2022. The stock
market will be flat for the next 15 to 20 years, with no money to be made
unless you are a great trader.”
“There has not been a lead smelter built since 1969, and no new major
elephant oil fields have been discovered in 35 years. There are 40,000 stock
funds, but only a handful of funds investing directly in commodities.
Merrill Lynch closed down their commodity operation in 1998, just as the
bull market was getting started.”
The Q & A session was equally insightful.
Q: If weakening the dollar is such bad economic policy, why does our
government do it?
JR: The theory is that is makes us more competitive. In reality, it hurts
consumers. Devaluing a currency does not work. Politicians do it because
people suffering is less important than them getting themselves getting
reelected. If this keeps up, other nations will dump their dollars, which
will lead to higher US interest rates.
Q: How does one address the issue that commodities are simply too risky?
JR: Everybody knows somebody who had a brother in law who lost his shirt in
porkbellies. He lost his shirt because he bought on 5% margin. He could have
bought on 50% margin or 100% margin. Everybody wants to get rich quick.
Q: Since most people understand stocks, why not buy commodity stocks instead
of pure commodities?
JR: Copper does not know who Alan Greenspan is. With companies you have to
analyze management, balance sheets, pension funds, etc. Enron was a natural
gas company, and it collapsed even as the price of actual natural gas itself
was skyrocketing. Cotton does not go to zero. No commodity goes to zero.
They can go down, but not completely. Commodities outperformed commodity
stocks by 300% over the last 45 years.
Q: How can other countries react to guard against the falling US dollar?
JR: The markets are bigger than any central banker. No country in history
has gotten out of a currency spiral without a crisis or semi crisis. We owe
8 trillion dollars, and our debt is increasing by 1 trillion dollars every
15 months. The market simply has more money than all the central banks
combined.
Q: What short term trades do you recommend?
JR: I am the world’s worst auto mechanic, and the world’s worst trader. I
buy cheap and hang on for a long, long time, sometimes too long.
Q: Given your driving around the world, what were your observations
regarding unleaded gasoline and crude oil?
JR: Most people don’t have unleaded gas. The price is tied to crude. The
real bottleneck is in refining capacity. Therefore, if the price of crude
increases, the price of unleaded gas should increase more. Adjusting for
inflation since the 1970s, the price of crude oil should be $90 per barrel.
Even if we discover oil tomorrow in a field, it has to be in a place we can
get to. In the 1970s, we knew where oil was coming from, and yet the price
still skyrocketed since we could not get to it. Now we don’t even know
where it is. Even if we find it, getting it to the market takes time.
Q: What about investing in alternative energy sources?
JR: Wind power is barely competitive in some select places, but overall wind
energy is not competitive. Solar energy is not competitive at all. Hydrogen
is not the answer. We are years away from making, buying and then
distributing the cars. There is no substitute right now for oil and natural
gas, except for sugar. The best way to buy crude oil is to buy sugar. Corn
is conceivably a way, but sugar is better.
Q: Where is the best beer in the world?
JR: The best two places I drank beer were the Congo and the Ivory Coast,
although it could have been because it was so hot. The Chinese also make
good beer.
Q: Why are rising oil prices a problem? Doesn’t it help American companies?
JR: It is problematic because Americans are not getting the proceeds. Even
though it comes back in dollars, by the time it gets back to us it is in the
form of a debased dollar. It might get to the point where oil ends up being
priced in euros, yen, or ivory, not dollars.
Q: What are the consequences of a falling dollar?
JR: Study the history of economies. In 1918 England had the number one
economy in the world. Within a generation, exchange controls were
implemented, and they lasted 40 years. England has not been the same since.
This will happen in the United States. With a falling dollar, there will be
higher interest rates. This will at some point lead to a credit crisis in
the form of a refinancing collapse. I am currently short Fannie Mae and
homebuilders in anticipation of this.
Q: For those who are not comfortable with commodities themselves, are there
plans to create ETFs, Spiders or tracking stocks specifically connected to
the Rogers Indexes?
JR: More people trust indexes over commodities. It is being worked on.
Q: What is your view on supply side economics, that deficits don’t matter,
that the key to a healthy economy is growth?
JR: With regards to supply side economics, no. Things do go wrong when
economies take a turn for the worse, and two groups of people always get the
blame by the politicians. First the politicians blame foreigners.
Foreigners are those people that eat different foods, smell bad and talk
funny. They are an easy target because they don’t vote. The second group to
get blamed by the politicians are the financiers. For the last 1000 years,
people love to blame the bankers. Wall Street and foreigners are responsible
for problems politicians create because they promise free money with no
consequences.
Q: What is your view on coal?
JR: The British Navy ran on coal. It was Winston Churchhill as Secretary of
the Navy that recommended that England should convert from coal to oil. It
hurt them, and England has not been the same since. I am bullish on coal. It
is a commodity, and will rise with oil.
Q: What is the main issue with oil?
JR: Countries are not putting money into exploration. There is no production
going on. There are plenty of oil profits, but those profits are being
invested in 5th Avenue real estate among other things. There are no new
mines or new oil, hence a bull market.
Q: What if China does not open up their currency and let it float freely?
JR: They have to open up to show the world that they are open. They have the
2008 Olympics and the 2010 Shanghai World’s Fair. Buying the Remni will be
a wise investment because I expect them to be open by 2010.
Q: What is your view on agricultural commodities, given a decrease in
subsidies?
JR: For the first time in history, we have had five straight years of
greater consumption than production, and this is without having a drought.
Throw in a drought and the problem will be worse. We have low stockpiles of
sugar, cotton and soybeans. Between agricultural, metal and energy sub index
funds, agricultural funds are what I like best.
Q: How did you turn $600 into your current success?
JR: I started out with $600, a second hand Volkswagen, and a wife. One was
an asset and one was a liability. I will let you figure out which was which.
I liquidated both, and still had the $600. I worked long hours, and spent
weekends reading about markets. I simply love it. You have to love what you
do, whether it be gardening, hairdressing, etc. When you love it, then the
money follows. Even if it doesn’t, you will still be happy. Being happy and
poor is better than being unhappy and poor. As for making money, I did very
little marketing. The key is to make your clients money. If you have a good
track record, people will find you and knock on your door. Just make your
clients money.
Q: What is your position on leverage?
JR: When I was a young man working 14 hour days, I traded using outrageous
and terrifying leverage. I was either very lucky, very smart or very dumb.
That’s what terrifies people about commodities. Commodities themselves are
no riskier than stocks. A stock on margin has more risk than a commodity
fully paid for. It’s all about the degree of leverage. Buying copper is the
same as buying IBM. Now that I am doing other things with my life, I am
using a lot less leverage.
Q: Can commodities do well during bad economic times?
JR: In the 1970s the UK had a top 5 economy. Then they went broke, and
needed to be bailed out by the IMF. Japan and the US were suffering
financially. During all of this global financial chaos, commodities were in
a bull market, with the price of oil rising tenfold. Demand for commodities
dropped, but the supply dropped even more. This also happened with lead.
Lead lost its two biggest markets. It is no longer used in gasoline or paint
. The demand for lead dropped, but the supply dropped even more, leading to
a rise in lead prices.
Q: What are some leading indicators of price movements?
JR: There is nothing reliable other than major secular trends. There is
nothing short term or medium term. If you find one, keep it to yourself and
get rich.
Q: Why do you like sugar so much?
JR: Sugar is 85% from its all time high, and that is without adjusting for
inflation. Taking into account inflation, sugar is free. It could triple and
be 60% from its high. It could quadruple and be 50% from its high.
Q: The fees on your indexes seem low. Is that an error?
JR: I’m not here to peddle my funds. I am here to peddle my books. One
person actually wanted me to raise my fees so that he would be ripped off,
and then feel like he had a legitimate investment. He ended up becoming a
customer, and I did not raise his fees.
Q: What are three ways a broker can expand their business?
JR: I can think of only one way, and that is to make profits for the clients
. Do right by the clients, even if it comes at your own expense as a broker
in the short run, and your clients will take good care of you in the long
run.
Q: What foreign currencies do you like?
JR: I own 12-15 currencies, and I do not have confidence in any of them. I
just have more confidence in them than the US dollar, which does not say
much. Singapore insists on a sound currency. The Canadian dollar is doing
well, Canada has a trade surplus, and Alberta is actually debt free.
Resources alone are not enough. The Congo has resources but the politicians
have bungled things there.
Q: Is this the final run for US commodity markets?
JR: If the US dollar continues to plummet and exchange controls are
implemented, then yes. People should be looking at foreign markets.
Q: Do you think it is easier to make money on the short side, since markets
do not go straight up, but can go straight down when they crash due to bad
news?
JR: There is no easy money, and there never was. Some people like to
reminisce, but there never were any “good old days.” Making money is hard.
Most people are terrified of selling short. President Eisenhower did not
know what short selling was, and President Nixon considered it unamerican.
Short selling actually helps markets, but it is easier to get clients on the
long side. The long side has unlimited profits, with losses limited to 100%
. Short selling has unlimited losses, with profits limited to 100%. I do go
short, but it is simply less complicated for customers, and easier to get
customers, by staying long.
Q: How will we know when the bull market in commodities is ending?
JR: Bull markets end in hysteria. In the 1990s, barbershops had CNBC on the
television so people could follow the stock market while getting haircuts.
That is not normal. The Wall Street Journal does not even capitalize the “N
” and the “E” in the “new economy” anymore. When old ladies and
teenagers are talking about markets, it is time to sell. I see us at the top
of a real estate bubble, but I always sell short too soon because a bull
market goes higher than any rational person expects. When I get wiped out
you’ll know that it’s the top.
Q:What are your feelings about options?
JR: I adore options. I made my first big killing in options on the long side
. I do not discuss options in my book because they require much explanation,
and that is for brokers to do.
Q: How does a change in central bankers from Greenspan to Bernanke affect
things?
JR: All new central bankers like to raise rates early on and make things bad
so they can then make things better down the line. I am serious about this.
Q: Any other thoughts?
JR: I had my first child, and I love it. I saw other people with children
and thought how bad it was for them. My traveling companion and wife Paige
Parker and I are the parents of a darling baby girl. She is learning Chinese
, because the 21st century will be the Chinese century. The 19th century was
the UK century, and the 20th century was the American century. I have hired
a Chinese nanny to teach my baby girl the language of the future besides
English. My baby girl doesn’t own any stocks. My baby girl owns commodities
. Everybody should have children. They are fun to make and fun to raise.
People should leave work right now and go home and make children. They will
enjoy creating them, and fall in love with them as I have with my baby girl.
Jim Rogers, in addition to being a husband and father, is an author. His
books, “Investment Biker,” “Adventure Capitalist,” and “Hot Commodities
,” are the second best education one can get with regards to commodities.
The only thing better would be to get to know Jim Rogers in person. His
newest book, “A Bull in China,” comes out in December. Jim wished us much
success in our lives, and the same wishes are extended to him and his family.
eric
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