Jim Rogers Newsweek Interview ~ market folly

Monday, April 13, 2009

Jim Rogers Newsweek Interview

Jim Rogers, noted investor and founder of the highly successful yet now defunct Quantum Fund (with George Soros) recently conducted an interview with Newsweek and we wanted to highlight the interesting bits. For the most part, Rogers has been saying the same thing on mainstream media appearances over the past few months. He appears on TV so often that he keeps having to repeat himself. But, at least he's not like Jim Cramer and doesn't throw out a million ideas just for the sake of new content.

So, while Rogers might not always have new points, it's interesting to hear him elaborate in more detail on some of the investment themes he has divulged thus far. We've covered many of his major stances on the blog before, most notably publishing a summary of Rogers' recent portfolio. Some of his main bullish theses include agriculture and commodities. Focusing in particular on agriculture, Rogers has become so bullish that he has gone to the extreme of investing in physical farmland. He touches on some of these theses again in his interview, where he talks about commodities:

"What’s the fundamental case for commodities right now?
Supply is declining. There’s been 35 years of low investment in production capacity. The last lead smelter in the U.S. was built in 1969! There’s been no major oilfield discovery in 40 years. Oil is in decline. According to the International Energy Agency, oil reserves are declining significantly. At this rate, in 20 years, there will be no oil left. The only people to make money in the next 20 years will make it in commodities. It’s the only asset class where the fundamentals are improving. I mean, look at Citigroup, look at GM. Those fundamentals are not improving.

Do you see commodities as an inflation hedge?
Absolutely. This is only time in history where you’ve got every central bank in the world printing money at the same time. Consumer prices are going to go way up. The public is already getting out of paper money, which is why you’re seeing gold go up.

Does the future growth of China factor into your bullishness?
China is tiny in comparison to the U.S. economy. Anyone who thinks that the commodities story is driven by China needs to do more homework. In the 1970s, everyone was in recession, and you still had declining supply [in oil] and higher prices. Asia wasn’t even in the game then. China was run by Mao. But now, of course, there are those 3 billion people in Asia who are in the game. It’s just another factor.

Are we going to see another food-price spike sometime soon?
Definitely. I think you should move back to Indiana and marry a farmer. There are times in history when the money lenders have been in charge, and we just came through one of those periods. But it wasn’t always that way. Wall Street was a backwater in the ’40s, ’50s, ’60s and ’70s, and it will be again. Farmers are going to be the ones driving Lamborghinis, and the traders are going to have to learn to drive tractors.

How about you? Are you upping your own commodities positions right now?
As a matter of fact, I am. I never sold anything to begin with. And I’m not planning to, either."

You can read about the rest of Rogers' current investment themes in detail in our recent summary. And, as always, you can check out the interview in its entirety at Newsweek.

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