Jim Rogers Sees Opportunity in Silver and Palladium

From time to time, we like to check in on investment guru Jim Rogers to catch up on his thoughts on the markets and global economy. We do so of course due to his past success with the Quantum Fund he previously ran with George Soros. Nowadays, Rogers invests his money under Rogers Holdings and he has some pretty staunch viewpoints. Rogers himself proclaims he is a poor market timer. So while he may be early on an investment theme, he often finds and rides macro trends. To some, his views seem repetitive. But you must keep in mind that he very frequently appears in the media and is seemingly asked the same questions over and over. The last time we checked in on Jim Rogers we saw that he was shorting market indices. From all of these interviews, one of his stances has become abundantly clear: he loves commodities and in particular, precious metals.

In his recent slew of interviews, Rogers has proclaimed that he is fond of gold and still owns it. However, he is not buying more nor is he selling. In the end, he actually thinks gold will be a bubble in the distant future. For some reason he tosses out the year 2019 as his estimate, and it seems he thinks gold's reign will last a decade or so. He thinks this bubble top is a ways off because governments have been debasing their currencies at a rapid rate. Historically, he points out, this has always led to higher prices for real assets and he thinks this time will be no different.

Speaking on the subject of gold, Rogers says that, "I know the old (gold) high, adjusted for inflation, is over a couple thousand dollars an ounce. I know it'll get over that in the next decade. It depends on how much they debase the currencies. It's all part of the same picture... most governments everywhere only know one thing and that's to print and spend money that they don't have. Whenever you do that, it debases currency, always has, and until I see some governments realize that they have to do something else, then I plan to own gold and other precious metals and other real assets."

This of course is not the first time we've detailed a prominent investor's fascination with gold. John Paulson's hedge fund Paulson & Co started a gold fund mainly to bet against the US dollar and the currency debasement that Rogers centers his thesis around. We've also seen John Burbank's hedge fund Passport Capital lay out the rationale for owning physical gold. Not to mention, David Einhorn's Greenlight Capital has owned physical gold for some time now. Inflation is a very legitimate future concern for some of the top minds in the investment industry. Rogers is no different.

His main rationale here stems from the fact that many long-term bull markets end in hysteria and bubbles. He doesn't like to buy things at all time highs and that's pretty much where gold is trading these days. As such, Rogers' interest has been piqued by other metals.

If he had to buy a metal right now, he said he would focus on depressed metals such as silver or palladium. Rogers points out that silver is 60-70% below its all-time high while palladium is around 50-60% below its all-time high. He already owns all four metals: gold, silver, palladium, and platinum. Throughout all his interviews, he was very adamant that he was not selling his gold, but he was not buying more either.

Shifting to Rogers' views on currencies, he is particularly fond of the renminbi. While it is not his favorite overall investment due to liquidity concerns, it is the long-term investment he is most certain of. Rogers mentioned this last week in talking with Bloomberg. And on CNBC that same week, Rogers reaffirmed that he is still long commodities and short stocks due to the withdrawal of government stimulus and his anticipation that central banks will keep the printing presses rolling. This is directly in line with what we saw from Rogers' portfolio in early May.

Lastly, we wanted to highlight that Rogers has been eyeing the events surrounding the oil spill as well. We've already detailed how Whitney Tilson's T2 Partners has bought BP, citing valuation and extreme circumstances. Rogers hasn't quite gone that far yet, but it has definitely caught his eye. On the topic Rogers ponders, "Is it the end of BP? I doubt it. Somewhere along the line I expect that I will buy BP. But I'm not buying it now - just watching to see what happens." In his experience, he notes that disasters are usually a great time to buy. On that same note, he also cautions that there's usually plenty of time to buy into the opportunity presented by the problem. For the time being, Rogers is more than comfortable to wait and watch the proverbial knife drop before jumping in the (oil coated) water.

Embedded below is one of his recent television interviews with CNN Money where he talks about various topics of interest (email readers will need to come to the site to view it):



That wraps up the latest views and portfolio positioning from investment guru Jim Rogers. For more of his thoughts and to learn from this investment guru, check out Rogers' books, Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market as well as A Gift to My Children: A Father's Lessons for Life and Investing.

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Jim Rogers Shorting US & Emerging Market Indexes

A few months ago we detailed how Jim Rogers had started some short positions. At the time, he was pretty vague but we did get a market call from him. This time around, he was more specific and more bearish. Legendary investor and ex-Quantum Fund founder Jim Rogers recently disseminated some of his thoughts via the Economic Times in India and keep in mind that he actually made these comments on Wednesday, so they preceded the downward market spiral we saw yesterday. Rogers noted that, "I am shorting a stock market index in the US; I am shorting an emerging market index and I am shorting one of the large western international financial institutions."

He specifically mentions that he's not shorting a particular country in the emerging markets but rather a cumulative index. Thus, traders/investors wanting to piggyback his trade could simply short the Emerging Markets exchange traded fund EEM. He is currently short that index because he feels there are excesses developing there. While he does not name names regarding his western bank short, Rogers says that, "it is a bank which people think is extremely sound & if I am right, there are going to be more currency problems and more turmoil in the markets. It will have to come down." So, let the guessing game begin there.

Further elaborating on currencies, Rogers says that, "The currency crisis has been going on for a while. It did not start this week. It has been happening for a while. It started with, maybe depending on how you want to look at it, with Iceland or Latvia or many other countries who have been having problems. And the currency crisis is continuing and is going to get worse. This is not the end. Over the next year or more, we are going to see more, so prepare yourself." An ominous omen from Mr. Rogers there, certainly. You'll remember that hedge fund 'rockstar' John Paulson has designed a fund to bet against the US dollar as he clearly feels the currency is in trouble. He is obviously not alone as Rogers is also worried about various currencies as is Eric Sprott who said to beware of fiat currencies at the recent Value Investing Congress.

So, we know what Rogers is bearish on, but what is he bullish on? Well, we previously outlined how Rogers is bullish on commodities and he has been for some time. We'll have to see how all of his market calls turn out, but even he admits that he's not a great market timer.

Jim Rogers Still Bullish on Commodities

Wait for it. Jim Rogers is... *gasp* bullish on commodities still! Now, who would have ever guessed that?! On a serious note, he still is adamant that 1999 was the start of the commodity bull market and he is bullish on the prospects. What's interesting is that he fully admits it will be a bubble at some point, but he's not worried about that right now as that's a 'way's off.' This interview comes after we saw Rogers recently start some short positions as he wagers the market is overdue for a correction.

Of course he also thinks gold is going up and he expects it to be at $2,000 at least by the end of this decade, if not higher. In the past we've posted up plenty of hedge fund research on gold, all of which we recommend checking out. He recently sat down with Bloomberg to discuss his most recent thoughts on April 7th. If you come to the site, below you'll find an embedded video of his quick interview:



So, he'll continue to ride the longer term trend that he feels is in-tact here. Rogers isn't a big believer in market timing and he'll gladly wait out the trend over the long-term. We check in on Rogers from time to time just to see what he's saying, but he appears in the media quite often, re-iterating a lot of his views anyways. Keep in mind that Rogers and George Soros previously managed the highly successful Quantum Fund and have since gone their separate ways. Head over to see Rogers' recent rationale for starting short positions as well as our coverage of George Soros' hedge fund portfolio.

Jim Rogers Starts Some Short Positions

Legendary investor Jim Rogers recently appeared on television and voiced some of his latest opinions and investment maneuvers. We haven't talked about the former Quantum Fund manager for a while because, let's face it, he's on television all the damn time. But, some of his comments from this recent interview made us take notice.

Potentially the most notable bit of his conversation was when he said, "I had no shorts for about 15 months so I started putting out some shorts recently. But the fact that I've been putting out shorts means the stock market won't pull back." So, it's interesting to see Rogers fight the current trend. In his mind, it's the right play, but he knows he's going to potentially feel some pain first. Many investors out there will agree that the market is overdue for a near-term pullback. MarketClub voiced these concerns in their recent technical analysis video of the S&P 500. Additionally, Bespoke outlined that many stocks are overbought.

We've also noticed some other signs that the market might be getting overheated for now. If you hadn't realized yet, there's been an insane amount of secondary offerings hitting the market. As we tweeted earlier, these secondaries typically come in droves when there is complacency and it could be a contrarian signal. (You can follow us on Twitter here). It's been noted many times in the past that investors often buy the most at the top. Where were all these secondaries when the market was tanking and stocks were cheap? There was no demand; investors were too scared. Now that everyone feels 'safe' again, the secondaries are rolled out, the buybacks crank up, and the insiders start purchasing. So, you can't really blame Rogers for taking a stab here even though he's going against the current trend.

In his interview, Jim Rogers also talked about some other hot topics. He touched on the euro given the fact that European sovereign defaults have taken centerstage. Rogers notes that, "The euro will probably break up in the next 15 to 20 years. Don't get me wrong, I own the euro. We've had currency unions in history. They didn't survive. This one won't survive either." So, he's short-term bullish and long-term bearish on the euro.

He then shifted his focus to how potential sovereign defaults could have ramifications for the currency. Rogers said that, "If the euro zone helps the Greeks, that weakens the fundamentals of the euro. As the next government comes to demand concessions, they weaken the currency from within. I would let Greece go bankrupt because then everybody will say the euro is a serious currency." This stance of his is by no means new. He's a staunch supporter of the notion that markets should work things out on their own, even if it means something will fail. So, it's always intriguing to hear what Rogers has to say.

In the end, everyone knows market timing is a bitch. While Jim Rogers obviously isn't suggesting you go net short, it makes perfect sense to us to put on some hedges, take some profits on longs, and to identify companies that are now looking too frothy. And, it sounds as if that's just what Rogers is doing. Whitney Tilson of hedge fund T2 Partners has been doing the same. Lee Ainslie of hedge fund Maverick Capital said in his investor letter that he thinks 2010 will be a return to a stockpicker's market. He makes a great point that the decline in the price of risk equals opportunity for shorts.

Here's the video of one of Rogers' recent television interviews:



In financial markets, you can never be too cautious. After all, it usually hurts more to be reactive rather than proactive. We just wanted to highlight Rogers' new application of short positions since he's previously been long for many months. It's been a while since we last covered the legendary investor in detail, but those looking for more of his wisdom can head to our ancient post on Rogers' portfolio and an interview with his thoughts on commodities.

Jim Rogers Portfolio & Thoughts: A Recent Summary

It's been a while since we last covered Jim Rogers in full, so we figured now would be a good time to assemble a collective update. In the past, we've extensively covered Jim Rogers' portfolio so make sure you check that out to get a good background. Today must be Quantum Fund day at Market Folly, as we have covered George Soros' hedge fund portfolio today as well. To get more insight from Rogers then check out his two books: Hot Commodities and then also A Bull in China.

Rogers has opinions on a vast array of topics so we'll just dive right in and try to present the updates as orderly as possible. Firstly, we want to start with the topic of the crisis in general. Obviously, Rogers thinks the United States and the UK are in bad shape and will be for some time. He likens the current situation to that of the 1930s. He says, "In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end. They are making many of the same mistakes now. What's different this time is that we are printing huge amounts of money which they did not print at that time. So, we are going to have inflation this time." While the current crisis is unique in its own right, it does have shades of the 1930s written all over it. As such, Rogers focuses on inflation a lot and we'll get to that below.

Agriculture

Rogers still likes agriculture and thinks it will be one of the best investments in our lifetime. He says so under the premise that the world is growing and so are the number of mouths to feed. The economic emergence of countries that previously did not enjoy protein heavy diets have also spurred this trend on. Add into the equation the fact that supply is not necessarily growing to match demand, and you could have a real imbalance in the future. As such, Rogers likes agriculture and specifically farmland. In the past, we've covered which farmland investments he has made and have elaborated on his thoughts. His main active investments are in Agcapita Farmland Investment Partnerships (in Canada) and Agrifirma Brazil. His bullishness on agriculture comes down to a simple supply and demand equation imbalance. Food inventories are at multi-decade lows and this is without a ton of major droughts or weather problems. Not to mention, there is a shortage of actual farmers (and not to mention farmland) and Rogers says this can be attributed to the fact that it has been a horrible business for the past 30 years. To see more of his thoughts on this topic, see our post about Rogers' extreme bullishness on agriculture.

Currencies, Commodities, and Bonds (Inflation Theme)

On the topic of currencies, Rogers has varying opinions as each currency is its own equation. Recently, he has been out saying that he owns the Chinese renminbi and he likes to add to his position every chance he gets (as he cites the difficulty to buy and sell the currency due to it being blocked). While he still has some US dollars due to being a citizen, he has sold nearly all of his holdings in the currency and sees serious problems developing. Overall though, he sees a currency crisis looming due to the amount of money governments around the world are printing. He sees the US dollar as a flawed currency and thinks it could be the source of the currency crisis. He explains saying, "I would suspect that somewhere along the line, someone's going to say, 'I'm going to start selling mine (dollars) before everybody else does.' That's when you have a currency crisis."

While he has focused largely on the US dollar, he has often remarked that the British Pound could have major issues as well. We found it intriguing that Rogers has repeatedly focused on the possible currency crisis scenario in his appearances. He has gone as far as to say that sovereign defaults are not out of the question. And, he would not be alone in that regard. Kyle Bass, manager of hedge fund Hayman Capital agrees and predicts sovereign defaults will be the next crisis. Bass is well known for predicting the housing crisis and profiting handsomely (along with John Paulson as well). To back up claims for possible sovereign defaults, Rogers highlights the UK in 1918 as it transformed from world power to a nation wrought with default in 1970. Additionally, he talks about how Iceland has already defaulted too. He thinks we could possibly see more defaults between now and 2011. You can view some of Rogers' past thoughts on currencies here.

Commenting on the government's actions, Rogers says, "It's a mistake what they are doing. It's giving short-term pleasure, but there's long-term pain as we are going to have much higher inflation, much higher interest rates and a worse economy down the road." Clearly, Rogers likens the current scenario to placing a bandaid on a gunshot wound victim and calling everything 'good.' Short-term solutions do not solve long-term issues. He cites this with evidence of the bond market already beginning to taper off and he thinks this will continue as the government sells a ridiculously large amount of bonds. This can be boiled down to one simplistic notion: when governments print a lot of money, you get serious inflation. At least, that's how Rogers sees it.

As such, Rogers does have one recommendation to benefit from this possible impending phenomenon: buy commodities. As fiat money depreciates in value and inflation rises, assets (and namely commodities) appreciate in value. He thinks that commodities could lead the global economy out of this mess and even if that doesn't happen, they will still appreciate due to inflation. In terms of specific commodities, Rogers likes cotton, sugar, as well as silver. For more of Rogers' thoughts on commodities, check out this post.

Gold and Silver

While we could technically lump his gold and silver commentary in the commodity section, we felt it deserved its own section due to his views on the precious metals. Overall, Rogers likes gold and has no plans to sell his. In fact, he could be adding to his position should the right circumstances pop up. He says, "The fact is that the IMF is trying to get permission from everybody to sell gold. I don't know if it will succeed or not. But if and when the IMF sells its gold, gold prices may go to a bottom. Who knows? It may go down to $700. The IMF has a lot of gold to sell. If it does, I hope I'm brave enough and smart enough to buy more." So, he likes gold. However, he likes silver even more right now due to it being cheaper on a historical basis since everyone has been piling into gold and driving up the price. Reverting to the topic of currencies quickly, we know that Rogers also thinks the debate on a new international reserve currency is a legitimate one. He thinks change is coming in this regard and he is not alone in those thoughts. Noted trader Dennis Gartman sees gold becoming the next reserve currency.

Short Positions

Rogers says it is rare for him not to have many short positions and so this definitely classifies as a 'rare' time for him. Derived from his stance on currencies, he hardly has any short positions at the moment due to the amount of paper money governments are throwing at the crisis. He thinks that a currency crisis is imminent and that investors should avoid shorting the market. Rogers says, "I'm afraid they're printing so much money that stocks could go to 20,000 or 30,000. Of course it would be in worthless money, but it could happen and you could lose a lot of money being short." As such, Rogers is not fighting the current trend and will pick his battles. (Do note that Rogers tends to exaggerate things to make a point and we highly doubt he realistically sees the market hitting those numbers). He thinks the extended rally is nothing more than a bear market rally which could be further fueled in the near-term due to a weakening dollar and the Fed utilizing the 'printing presses' and printing more money.

China, India & Sri Lanka

While Rogers is bullish on agriculture and commodities in general, he is also bullish on select sectors in emerging markets too. Specifically, he has focused on water treatment. He notes China and India's water problems and he has bought water companies in China. He did not cite specific names, but we do know that Heckmann (HEK) has had a large presence regarding water in China, even if it is not right along the lines of what Rogers is referring to. He says that the Chinese are aware of their problem and are spending "hundreds of billions" to solve their agricultural problem. So, his bets on water treatment and agriculture are tied together.

When pitting the emerging market nations against one another, Rogers favors China over India. He does so because of the reforms and change that India requires to fully compete. While he likes the commitments coming out of India lately, he needs to see action rather than just pledges for it to become the next real big investment opportunity. Specifically regarding India though, he did say that he likes the prospects of tourism in that nation. While Rogers likes China, he has not added to that position since picking up shares back in October and November of last year. Instead, he is directing money toward commodities.

Turning specifically to Sri Lanka, we find out that Rogers really likes this nation as an investment because it looks as if the 30-year war is coming to a close. He cites numerous other examples of war-torn countries that have emerged successful after troubled times. Rogers highlights that there is significant opportunity at hand, and all it takes is hard work. He likes Sri Lanka as an investment more so than India, Pakistan, or Bangladesh.

Conclusion

As you can see, Rogers is very opinionated on a large set of topics and likes to think in macro themes. After all, this is where his successful background comes into play. He made a fortune running the Quantum Fund with George Soros using similar strategies. While the fund is now defunct, both are still active investors and are good to track for their macro methodology. Make sure you check out our past update on Rogers' portfolio to get a better idea as to what other positions he holds. Also, we examined George Soros' hedge fund portfolio this morning as well, so make sure you see what macro themes he likes these days.

To conclude, Rogers thinks that the stock market will eventually hit new lows this year or next year after the bear market eventually subsides. He thinks that our problems remain largely unsolved and we have a whole lot of work to do in order to emerge from this mess. He thinks that the UK is potentially worse off than the US (because the US has agriculture to fall back on), but that the overall picture is still bleak either way. He thinks that moving to London in 1807 was brilliant, that moving to New York in 1907 was brilliant, and that moving to Asia in 2007 would be the next brilliant move. He clearly sees a shift of power to the east as the emerging markets (and particularly China) start to bloom. He sees Mandarin as the most important language in the world going forward and has already begun teaching his daughters.

Speaking on the global economy's future, Rogers draws from the past by saying, "Throughout history, the center of the world has shifted to where the capital is, where the assets are. You don't see any period in history where things are shifting to the debtors, and America's the largest debtor nation in the history of the world. Unless something's different this time, unless the world's changed very very dramatically, the center of the influence, the center of the power, the center of the earth, the center of the globe, is going to be shifting towards Asia, because that's where all the money is. Have you ever heard of anybody saying, 'Let's go to where all of the debtors are'? It just doesn't happen that way."


If you want to follow Rogers, then bet on inflation, agriculture, commodities, China, and bet against the US and the UK. For more on what he deems to be the best investment opportunities out there, check out Rogers' two books: Hot Commodities and then A Bull in China. We'll leave everyone with one last bit of advice from Rogers: become a farmer.

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Sources: Numerous media appearances, interviews, and conferences.

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.

Summary of Jim Rogers' Recent Portfolio

Jim Rogers has been in the media a lot over the past couple weeks and we wanted to provide a summary of these thoughts. He is a noted investor and founder of the highly successful yet now defunct Quantum Fund (with George Soros). Rogers has been out providing his opinion on various topics and giving us a deeper glance at some of his portfolio plays. We've compiled a list of some of his major positions below. Firstly, we'll examine some of the plays he's revealed just over this past week.

The rally we've been seeing in equity markets is a bear market rally that can last anywhere from days to months, according to Rogers. He sees the economy as getting worse before it gets better, citing more bankruptcies to come. It might be 'a bottom,' but its not 'the bottom,' Rogers said. He's very bearish on a macro level and thinks it could take 7 to 8 years to really clean out the system. He's noted that all the bailouts have added to the risks of an economic depression. His displeasure with the US government is no secret, as he thinks they are 'throwing money' at the wrong things.

In terms of the US financials, Rogers has covered his Citigroup (C), which was a short that had paid him off handsomely. He has also mentioned that he has covered most of his short positions in stocks. But, he is now short JP Morgan Chase (JPM), as he sees negative 'off balance sheet' exposure, along with derivatives exposure, and large exposure to the credit card business. Rogers has noted something that we here at MarketFolly have been talking about for some time: credit cards as the next credit crunch. And, head of JPMorgan Jamie Dimon even acknowledges this as well. Rogers has chosen to short JPM for a myriad of reasons, but credit cards are certainly one of them. Even the 'good house' in the 'bad neighborhood' can't escape. While he has that short position in the financial space, he has no positions in the insurers. He notes that sure, financial institutions can rally back from their lows, but that they still aren't financially sound. He thinks that financials won't be an attractive investment for years to come. Additionally, while not a financial, he mentioned he was short IBM (IBM), presumably due to their large financial services exposure.

Rogers has again re-voiced his concern with government debt, which has recently expanded five-fold. He was previously short the long-dated treasuries, but had to cover back in the fourth quarter. He has been patiently evaluating for a time to re-enter this position for the longer trend he forecasts. In the midterm, he won't fight the government though, as e expects them to buy treasuries in an effort to stem borrowing costs. Governments around the world are printing a ton of money and borrowing insane amounts. Rogers cites this as the reason for his desire to short the bonds eventually. We agree with Rogers on this point, and are willing to have extreme patience before entering this trade in size. It undoubtedly will take much longer to play out than many realize, especially when the Federal Reserve is still active and busy. We laid out our basic rationale for shorting treasuries down the road as well. Again, as Rogers emphasizes, patience is key.

Additionally, he has been waiting to establish a short position in the US dollar. He has been long the Dollar, which he says is rallying artificially, and is looking for this unwind to continue before he unloads the rest of his Dollar position, as he believes the US is trying to devalue its currency. He also currently owns some Japanese Yen and has elaborated on currencies recently. Considering his distaste for some of these paper currencies, he has a small gold position. But, he prefers silver and agriculture to gold.

We already know that he is bullish on commodities, and very bullish on agriculture. He has re-hashed this view numerous times. He might be early, but he has always claimed that he is not a market timer. He feels this trend will eventually arrive and he is poised to benefit from it. Raw materials and commodities are the only sectors with improving fundamentals according to Rogers. He expects low inventories and tons of shortages in the longer term (10-20 years). You have to keep in mind that Rogers is not a market timer and instead positions himself for broad, longer-term trends. He favors the commodities themselves over commodity resource stocks. And, he has even gone out and bought physical farmland. He has active investments in Agcapita Farmland Investment Partnerships (in Canada) and Agrifirma Brazil. As we noted in our hedge fund portfolio tracking series, Rogers' ex-Quantum Fund buddy George Soros has also bought a ton of Potash. So, they definitely share a bullish stance on agriculture. Lastly, its also worth noting that respected investment strategist Don Coxe is also an ag bull.

Overall, Rogers has a bearish macro view and expects bear market rallies, as they are just part of the cycle. And, while certain toxic companies like the financials may rally, he notes that they still have big problems ahead of them. He isn't a market timer and expects rampant inflation as well as bull markets in agriculture and commodities. He has placed bets to the tune of these forecasts and will continue to monitor the investment landscape for broad macro trends he can capitalize on in the future. If you enjoyed this post, please consider getting our free updates via email or for free via RSS reader. We cover gurus like Jim Rogers as well as other prominent hedge fund managers on a daily basis.

Lastly, if you've missed them, you can also see Rogers thoughts on the topics of:

• China, inflation, & the recession
• Agriculture
• Commodities
• The British Pound
• Other Currencies
• Long-term US bonds
  

Sources: Bloomberg, (again), CNBC, and various other media appearances

Jim Rogers Buys Farmland

In a recent interview with CNBC, Jim Rogers has taken his bullish stance on agriculture to the next level: He is buying Canadian and Brazilian farmland. He says,

"I am buying greenfield land in Brazil and existing farms in Canada and starting to farm it. The funds are clearing the land, fertilizing it, irrigating it and hiring farmers and some day will probably sell the land but that is a remote prospect."

We've known about Rogers' bullishness on agriculture for some time. But, this bet takes it up a notch. By purchasing the land itself, Rogers is securing a stream of future production in a world he argues will be pressed for food production in the future as demand rises. And, for what it's worth, Don Coxe agrees with Rogers.

Other notable agriculture bulls include Rogers' ex-Quantum fund partner George Soros. As we noted in our hedge fund portfolio tracking series, Soros has bought a ton of Potash. Rogers, though, has certainly taken it to the next level and has placed his bet on the next big real estate boom. For more thoughts from Rogers, check out his stance on currencies as well.

Here are Rogers' thoughts on video:

Jim Rogers Interview From Russia

Jim Rogers latest thoughts from February 5th in Russia:

"Thanks very much for giving us your time, first of all and welcome to Russia. You have made some investments in China because the government is planning big stimulus plan there, what are you making of what Russia`s doing, do you see anything interesting here in Russia that you're investing in?

In October, November I did buy more Chinese stocks but I am not buying shares in any other country in the world right now, because most of the world is in serious trouble including China. Don't get me wrong, but I'm not investing anywhere and certainly not investing in Russia.

Certainly not, why?

Well, I am certainly not investing in America either, for that matter and certainly not in the UK but no, the Russians have lots of problems, deep seated problems as far as I am concerned, perhaps there`s a chance Russia will continue to disintegrate in more than one country. There are lots of potential problems in the former soviet union.

Disintegrate, you mean, into separate countries?

The soviet union broke up into 15 countries, Russia itself has the potential to continue to break up, the Ukraine may break up Kazakhstan could break up, this is still not stable and every empire has disintegrated through out history. The reverberations have gone on for long periods of time. So I am sure there's good investment in Russia if you're on the ground and you can stay with them, but not for me.

What in your opinion is Russia doing right and what is Russia doing wrong in handling this crisis?

Well, what they're doing wrong is that they are propping up their banks which I find reprehensible I find bad economics and bad morality as well, the way the system is supposed to work is suppose you take the assets from the incompetent and give them to the competent and you start over from a stronger base. Well the Russians are making the same mistakes that the British and the Americans and everybody else is making. But taking the assets from the competent and giving them to the incompetent and know thy can compete with the competent, it weakens the whole system. Putin at least seems to understand that there is a problem with the US dollar, that the world needs to adjust to that problem, he seems to understand some of the problems the world faces better than we do in America, but for the most part the Russians are making mistakes too.

You said the Pound is finished, what is your take on the ruble?

Ahhh, the ruble. That's a very good question. I am not sure, even if I had an answer I am not sure I would give it to you. No, I am not optimistic about the future of the Ruble at all. The Russian at least have natural resources to some extend but I am not optimistic about the continuing stability of Russia. The natural resources, the reserves are declining as you know, because they have been stripping the assets here in Russia for some time. Oil production peaked, production of most things peaked in Russia for the foreseeable future, so I am not buying the ruble either.

The Government announced that it would defend the ruble at 41 against the Euro / Dollar basket. Was that a mistake to announce a target?

It always as been in the past the market has learned in the last few sessions that you can always bet against the central banks and you will make money eventually. So when a central bank says “don't you worry the pound is going to stay here or the ruble is going to stay here or whatever, ultimately that has always failed if the fundamentals are not sound and will fail again, everybody knows what the target is.

What is driving the fall of the ruble? Is it regular people panicking and putting their money into dollars, that one thing we`ve heard from bankers here at this forum, or is speculation?

Its mainly the Russians, in fact whenever a currency fails through out history it has always started internally, the foreigners always get the blame because the politicians like to blame all their problems on the foreigners, because they don`t vote and their not there. Right now I think there something like 20 or 25% of deposits in banks in Russia in foreign currencies by Russian and not by foreigners. So its always starts with the local people, because local people always know best what`s going wrong and they start moving out. The speculators historically always show up later.

So there are Russian speculators that may be involved here too, or is this just the average bank depositor moving their money into dollars out of concern?

It seems pretty obvious that its intelligent people making intelligent decisions with their money, they can see there`s going to be problems with the ruble so they, intelligent Russians have been moving out of the ruble. The ruble is down 50 or 60% in the last few moths, or in the last year or so.

The Central Bank said today that they won't have to spill much blood to defend the ruble at 41, do you believe them?

I don't believe in any central bank no matter what they say. The few times central banks have been right at something, you can count them with one hand. If you get your investment advice from central banks or governments you are going to go broke fast, don't listen to those people.

Are you short the ruble?

I am not doing anything with the ruble, not right now. But knowing that the central bank drew a line in the sand it makes me stand up and take a little more notice about the ruble. So I will start thinking more about it."

For some of Rogers' recent commentary, check out his thoughts on British pound, on agriculture, on commodities, and more.

Jim Rogers On Currencies

Jim Rogers recently gave his thoughts on various world currencies:

• Owns the Euro, Swiss Franc, Norwegian Krona, Danish Krona, Swedish Krona, Japanese Yen, Chinese Renminbi, Singapore Dollar, Australian Dollar
• Expects the Japanese Yen to rise another 10-15%
• The current dollar rally is a forced short covering - not a flight to safety

And here is the video:




Big hat tip to CommodityBullMarket for flagging this, which we somehow missed. For some of Rogers' recent commentary, check out his thoughts on British pound, on agriculture, on commodities, and more.

Where Some Market Gurus Are Investing

Recently, some 'market gurus' spoke up about where they are investing in these challenging times and we wanted to highlight some of the results:

John Bogle, the founder of Vanguard

• Roughly 25% in stocks

• Says: "I earn my money and spend my money in dollars, and I don't need to take currency risk."

David Dreman, the contrarian and manager of Dreman Value Management

• Roughly 70% stock allocation

• Likes oil and gas exploration and production companies such as Apache (APA), Anadarko Petroleum (APC), & Devon Energy (DVN)

Burton Malkiel, economics professor at Princeton and author of A Random Walk Down Wall Street (which we highly recommend).

• Bumped up his allocation to tax-exempt bonds due to great yields

Jeremy Siegel, professor of finance at the University of Pennsylvania's Wharton School and senior advisor to WisdomTree

• Raised allocation to junk bonds

• Says: "Stocks and high-yield bonds will move together as the crisis passes."

• 1/4th to 1/3rd of foreign stock allocation in emerging markets: "They've gotten cheap enough to really give value now."

• Added U.S. real estate investment trusts to his portfolio

Muriel Siebert, founder of Muriel Siebert & Co

• Buying Pfizer (PFE), Altria (MO), & General Electric (GE)

• Says: "I don't mind buying a stock on the bottom and waiting. But I do think when you get a market like this, you should be paid while you wait" (hinting at the solid yields of those stocks).

Jim Rogers, founder of the successful, now defunct Quantum fund (along with George Soros). Also author of Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market

• Putting new money into Chinese shares, focusing on buying agriculture, water, infrastructure. Also focused on putting new money into commodities, particularly agricultural ones.

• Some of his other stances include: Bearish on long term US bonds/treasuries and also bearish on the British Pound.

Link: WSJ

George Soros Discusses His Portfolio From 2008

Hedge fund manager and legendary investor George Soros recently penned an article in the FT, detailing how the markets played out in 2008 when Lehman Brothers was allowed to fail. In the article, there is also a section entitled 'The Soros Investment Year,' where he details how his portfolio played out over 2008. He writes,

"Positions I took were too big for ever more volatile markets.

Although I positioned myself reasonably well for what was coming last year, one thing I got wrong cost me dearly: there was no decoupling between markets of the developed and developing worlds.

Indian and Chinese stocks were hit even harder than those in the US and Europe. Since we did not reduce our exposure, we lost more money in India than we had made the year before. Our Chinese manager did better by his stock selection; we were also helped by the appreciation of the renminbi.

I had to push very hard in my macro-account to offset both these losses and those incurred by our external managers. This had its own drawback: I overtraded. The positions I took were too large for the increasingly volatile markets and, in order to manage my risk, I could not go against the market in a big way. I had to try to catch minor moves.

That made it difficult to maintain short positions. Although I am an experienced short-seller, I got caught several times and largely missed the biggest down-draught, in October and November.

On the long side, where I stuck to my guns, I lost an enormous amount of money. I was impressed by the potential in the new deep-water oilfield in Brazil and bought a large strategic position in Petrobras (PBR), only to see it decline by 75 per cent at one point in time. We also got caught in the developing petrochemical industry in the Gulf.

We did get out of our strategic long position in Vale (RIO), the Brazilian iron ore producer, in time for the end of the commodity bubble and shorted the other big iron ore groups. But we missed an opportunity in the commodities themselves – partly because I knew from experience how difficult it is to trade them.

I was also slow to recognise the reversal of fortune for the dollar and gave back a large portion of our profits. Under the direction of my new chief investment officer, we did make money in the UK, where we bet that short-term interest rates would decline and shorted sterling against the euro. We also made good money by going long on the credit markets after their collapse.

Eventually I understood that the strength of the dollar was due not to people choosing to hold dollars but to their inability to maintain or roll over their dollar obligations. In a very real sense the strength of the dollar, like the fever associated with sickness, was a measure of the disruption of the financial system. This insight helped me to anticipate the downturn of the dollar at the end of 2008. As a result, we ended the year almost meeting my target of 10 per cent minimum return, after spending most of the year in the red."

Its interesting to see Soros speak about his portfolio so freely, as it gives you a rare look inside how a hedge fund manager's portfolio played out over a yearly time-frame. When we covered Soros' portfolio holdings, we had noted his large stake in Petrobras (PBR), one which he was immediately underwater on. We've also noted that he has been building up a large stake in fertilizer player Potash (POT) to coincide with his bullish stance on agriculture. It sounds as if he has stuck with his position, but we will see when the latest SEC filings come out here in the next few weeks.

Soros has been omnipresent in this crisis it seems, sharing his take on the current markets and what has happened. In fact, he's even written a book about the current financial landscape entitled, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. He sees vast problems with the financial industry and also sees a contraction in the hedge fund industry underway.

To further understand how Soros' mind works, we'd highly recommend reading his book, The Alchemy of Finance by George Soros. In it, Soros details his decision making process behind investing in the financial markets. Paul Tudor Jones has said that this book is, "a timeless instructional guide of the marketplace." In addition to covering Soros on the blog, we've also covered his old Quantum fund partner Jim Rogers' thoughts over the course of the year. He likes agriculture and commodities going forward on the long side. On the short side, he likes the US Dollar, the British Pound, and long term treasuries.

If you're unfamiliar with Soros or would just like more of his thoughts, head over to our post on hedge fund manager interviews. And, here is the link to his January 28th article in the FT.

Jim Rogers' Latest Thoughts: Bearish on British Pound (& More)

Grace Cheng over at DailyMarkets has interviewed Jim Rogers recently and we've highlighted some of the intriguing parts of the interview below.

"As you’ve said many times, the US government is printing a lot of money right now, when do you think inflation will come around and bite us?

Rogers: Well there is inflation now in many things. There’s temporary deflation in raw material prices and in some property. But throughout history, whenever you’ve had gigantic printing of money and spending of borrowed money, it has always led to higher prices. Unless something is dramatic, it’s going to happen again. When? I don’t know. It’s already happening in some things. I don’t know if you’ve bought any sugar recently or some other things, prices are up and that will continue and it will get worse.

You’ve been bullish on commodities for a long time, recently you said you’re buying the Rogers Metal Index. Do you think that the Obama stimulus plan will create more demand for commodities?

Rogers: Well of course, anything that causes a revival of economic activity causes a revival of demand for everything including commodities. I mean if you’re gonna build bridges you’ve got to build them out of something you cannot build virtual bridges you have to build real bridges, etc.

You’ve said that over the long term, the US dollar is doomed. What are your thoughts on the British Pound?

Rogers: More doomed. It will disappear sooner. If it weren’t for the North Sea, the British Pound would have already disappeared. It’s more doomed. The UK has been exporting oil for 26 years; within the decade, the UK will be a net importer of oil again, and they have nothing else to sell to the world once the oil dries up."

Rogers has been out in the media a lot lately, re-hashing numerous themes. Here are some of his theses, many of which we've highlighted on the blog before:

• Bullish on agriculture
• Bullish on commodities
  
• Bullish on China
• Bearish on long term US bonds/treasuries
• Bearish on the US Dollar
• Bearish on the British Pound
  

Make sure you check out the rest of Grace's interview here.

Eric Bolling's Latest Trades & Thoughts

Over on TheStreet.com, notable trader Eric Bolling has posted up his latest piece. He's bullish on commodities and writes,

"And then, wow, it hit me like an ice cold shower. We are headed for a period of serious inflation with all the stimulus (free money) we are pumping into our economy. The dollar will be dramatically devalued and the reflation of the U.S. economy will happen, in a big way! Watch oil, gold and agricultural commodities soar in the coming years. With cheap and free dollars pumped into the system, the value, or buying power of those dollars, has to drop. The things we buy with dollars will increase in price just to keep up with the devaluing currency that is traded for it. And toss in a recovery and rebound in demand, you have the makings of a serious price recovery."

...

In energy related stocks and ETFs, I own U.S. Oil Fund (USO), El Paso (EP), and Quantum Fuels (QTWW). In metals, I own iShares Silver Trust (SLV) and SPDR Gold Shares (GLD). And finally, I bought PowerShares DB Agriculture (DBA) as the agricultural commodities have fallen with the rest of the dollar-based commodities. Much of the timing of this trade relies on the length of the current recession. It is possible that this trade may take months to open up. If the global economy struggles, so will this trade, so either have a longer-term horizon or trade smaller. I am in this for the long haul. At lower oil prices, I like the trade even more.

...

I am more convinced than ever that if you have a 12- to 18-month time horizon, there are amazing opportunities out there in commodities."

Regarding crude oil, we definitely agree with him and have been trading around it with the gyrations, while maintaining a core position all along. Longer-term, we see this as an excellent area to accumulate oil. The supply picture is and will continue to dwindle going forward. In terms of agriculture, we've also been getting constructively bullish, but still think it is a little early to touch this one. However, legendary investors and ex-hedge fund managers of the notable Quantum Fund, Jim Rogers and George Soros have both proclaimed their bullishness on agriculture. Rogers thinks that commodities will be in a bull market for years to come and have unimpaired fundamentals. Soros is equally as bullish and has also been accumulating a lot of Potash (POT).


In addition to TheStreet.com, Eric Bolling posts over on Twitter. On Monday night (1/5) and again Wednesday morning (1/7), Bolling noted that he,

"Trimmed (United States Oil Fund USO position) by 1/3....another 1/3 a bit higher and last 1/3 hold for the run up. will buy all sales back on a (Crude Oil) $45 pullback...under $45 I like it. I will scale down from $45 to $35 "

And, he also re-affirmed his play on platinum, writing

"I talked about this trade on Happy Hour last night. Long $PL short $GC long platinum short gold spread trade. I put it on yest(erday)."

You can follow Eric's twitter here and our twitter updates here. Make sure to check out the entirety of Eric's piece on TheStreet.com. Lastly, if you've missed it, you can check out some of Eric's other recent commentary here.

Jim Rogers on Long Term Bonds

"I was shorting the long bond in October and in November but I had to cover. I plan to sell them short again along the line. Bonds are the last bubble, its clearly a bubble. Everybody is pumping bonds like crazy." - Jim Rogers

Repeatedly, Rogers has said he is looking to buy Agriculture, to short U.S. long-term bonds, to short the US Dollar after its rise fully secedes, and to buy Japanese Yen. (See our rationale behind shorting long-dated treasuries)

Jim Rogers' Latest Thoughts

CommodityBullMarket has done an excellent job of jotting down notes from Jim Rogers' recent interview with the FT. Here are some important points they highlighted:

"Part 1 - Global recession will be long and deep.

• He has not yet exited his US dollar positions, as he believes the current rally is an artificial one driven by short covering.
• It could go longer and higher than anyone expects.
• Reiterated his opinion that the US dollar is a flawed and maybe doomed currency.
  
• We're going to have the worst recession since World War II
• Likely we'll see exchange controls at some point in the US
  

Part 2 - Market correction is good for commodities.

• The way to make money now is to buy the things where the fundamentals have been unimpaired.
• Not only are the fundamentals of commodities unimpaired, but they have been strengthened, as supply is going to take a serious hit across the board as a result of tight credit markets.
• "Farmers can't get loans for fertilizer now."
• In the 30's, commodities hit bottom first because there was no supply. The same thing happened in the 1970's - again because there was no supply.
  

Part 3 - China economic story still intact.

• "Selling China in 2008 would be like selling America in 1908. You might have looked good in the short term...but who cares?"
• He bought more Chinese shares in Oct/Nov of this year.
• Also believes the fundamentals of China will come out of this recession unimpaired.

Part 4 - Inflation is coming - you'd better own real assets.

• We're following the mistakes of Japan by bailing everyone out.
• This is the first time in world history that every government in the world is printing money.
• It will lead to much, much higher prices.
• Don't sell your gold, cotton, or sugar, because prices will be much, much higher in a few years.
• We are not experiencing deflation - this is forced liquidation. We're fighting the wrong battle by fighting deflation."

Thanks again to CommodityBullMarket for the great summary of his interview. And, if you want to check out the full interview, head to the FT. Lastly, we wrote about how Rogers dislikes bonds here, and about how he is bullish on agriculture here.

Jim Rogers Dislikes Bonds, George Soros Doesn't Rule Out Depression

Our old Quantum Fund buddies are up to no good again, chiming in wherever the media outlets can pick them up. Recently, Jim Rogers was out saying that he thinks bonds will be a terrible investment for the next 10 or 20 years. Additionally, George Soros, in his Congressional testimony, said we are in a deep recession, and would not rule out the possibility of a depression.

Checking in on Jim Rogers & George Soros

In keeping up with all the various hedge fund managers and 'whales,' I would be remiss if I did not include Jim Rogers and George Soros, co-founders of the legendary Quantum Fund. In a recent Canadian Business article, Jim Rogers sat down to share his thoughts.

"In fact, so convinced is Rogers of the commodities story that he has been buying agricultural products while selling U.S. dollars through this period. “The U.S. dollar is the most flawed currency in the world right now. I plan to sell all my U.S. dollar holdings on this boost. It’s losing its status as the reserve currency of the world,” said Rogers at a press conference before the dinner. “We owe the world $13 trillion and every 15 months we add another $1 trillion.

According to this theory, the drop off in commodity prices is just what the Chinese economy, already suffering from inflation, needs right now. The drop in prices will give the Chinese economy some breathing room. And if the country can avoid a major meltdown, the slack in western demand might be just the thing to allow China to increase its own consumption bubble. Not only that, but as China reduces its reliance on foreign exports we might see the country focus on more internal consumption, and that will see it pull in even more resources.

Let’s not overlook the fact that as prices drop, all kinds of new projects to bring more commodities online are being delayed. That means even less new supply online and ready to go once the world economies get back on the growth track. That is, the current price declines are piling fuel up for a new commodities boom, which sits just one recovery out says Rogers."

Additionally, Rogers recently appeared on Bloomberg to discuss his theses.




George Soros, on the other hand, sees a vast contraction in the hedge fund industry. He is not alone in this regard, as we also pointed out previously in our post 'Hedge Fund Redemptions: Let the Bloodbath Begin.' If the recent hedge fund performance numbers are any indication of the true pain felt in the broader industry, then Soros should be right on the money with this call as redemptions continue. Soros recently said,

" 'The hedge fund industry is going to move through a shakeout,' Soros said in a speech at the Massachusetts Institute of Technology in Cambridge, Massachusetts. 'In my estimation (the industry) will be reduced in size by anywhere between half and two thirds.' "

You can view the entirety of Soros' thoughts at MIT by clicking here (windows media file). Additionally, it should be noted that Soros definitely agrees with Rogers when it comes to agriculture. As we noted back in August, Soros had been picking up a lot of Potash (POT). And, we also recently posted Soros' in-depth interview with Fareed Zakaria.

Overall, these investing legends seem to harp on one major point: the commodities bull is not over, it is just beginning.


Sources: Canadian Business, MIT