Jim Rogers needs little introduction.
Q4 hedge fund letters, conference, scoops etc
He’s the man behind the Quantum Fund – one of the most successful hedge funds of all time. Jim is an investing legend, best-selling author and Guinness World Record holder. So when he speaks, smart investors listen.
I recently sat down with Jim for our Asia Wealth Virtual Summit to talk abouthis views on the best investment opportunities in Asia (and the world)… and what he’s doing with his money today. (If you weren’t able to attend our Summit live, click here to learn about getting exclusive replay access.)
What follows below is just a short except from our conversation…
The coming crisis Jim sees
Kim: I was hoping we could talk about markets and where you see opportunity.
Over the past few months, we’ve seen enormous volatility [in markets]. We had an almost-bear market in the U.S., and U.S. interest rates are on hold. There’s a consensus that global growth is slowing down. The U.S.-China trade war is casting some doubt over the whole future of globalisation. Where do you think things are going?
Jim: I think the last time I saw you, I told you that what would happen is the central banks would try to do things right, but then, when things went wrong, they would panic because they’re just bureaucrats and academics. They have no clue what’s going on in the world or how to run the world. Look what they did. They drove interest rates to the lowest in recorded history, negative in some places. They have no clue. Occasionally, one of them will let slip, “We did this as an experiment, we were hoping it’s going to work.”
I’m telling you it’s not going to work and we’re all going to pay a horrible, horrible price. Partly because they did not know and do not know what they’re doing. So, of course, they got scared. [The] market went down 20 percent, they panic and said, “Oh, sorry, sorry.” And they’re going to do that every time.
But eventually, the market’s going to say, “We don’t care, guys. You can pull all the shenanigans that you want, but we’re going down, and the markets are going to go down a lot.” Not right now. I’m just saying how this is going to play out with the central banks.
In the end, we’re all going to pay a horrible price. Debt is now the highest in recorded history all over the world. 2008, there was too much debt and we had a problem. [In] 2008, at least the Chinese had a lot of money saved for a rainy day. It started raining, they started spending, it helped save the world. The central banks in the world could take interest rates to zero, and negative, and they did.
But what are we going to do next time? Even the Chinese have debt now. Interest rates can go to minus five, minus 10. But that would just tell the world, “Boy, we have a problem.” So you should be worried.
The end of globalisation
Kim: Over the past 30 years, a lot of global growth has been driven by the huge increase in global trade, globalization, tariffs coming down and borders opening up. We have seen the beginning of a reversal of that. I guess this kind of plays into the thesis you were just describing. How do you see that unfolding?
Jim: Well, fortunately, or unfortunately, countries are closing off now, led by the U.S., the land of the free. And it’s going to get worse.
Mr. Trump’s going to announce good news with the in Chinese in the next few days, and we’ll have a rally. But then when things get bad in the American economy, Mr. Trump is going to blame it on everybody. He can blame it on you, me, China, Germany. He’s going to blame it on everybody in the world except himself.
And he’s going to have a real trade war. Mr. Trump, basically, his mentality is that trade wars are good, that he can win a trade war. He thinks he can win a trade war. And the people around him also have that same mindset. So when things get bad later this year, or next, back comes the trade war.
And it’s going to get worse. It’s going to be the worst in our lifetime. I mean, I don’t particularly like saying it. But in 2008, we had a problem because of too much debt. Kim, since 2008, the debt has skyrocketed everywhere. Even China, even China has debt now. So everybody’s going to have a bad problem.
How to protect yourself
Kim: So you’re describing a depression or crash… how does someone insulate themselves from that sort of thing?
Jim: Kim, aren’t you listening? You read Stansberry Pacific Research. [Laughs.]
Well, first of all, you don’t listen to me. You don’t invest in anything that you, yourself, don’t know about. Don’t watch some guy on the internet or TV. Even if he’s right, you’re not going to know what to do six months from now, a year from now if you buy X because Joe said buy X, you don’t know what to do. And if it’s wrong, you really don’t know what to do. So you’re in serious, serious trouble. So don’t invest in anything that you don’t know about. And if you don’t know about something to invest in, put your money in the bank.
Now, your next question is, which bank, which currency? In 2007, a lot of people said, “The world’s coming to an end,” and they put a lot of money into Icelandic banks and the Icelandic króna. They got wiped out. They were brilliant. They knew problems were coming. And they took defensive measures and got wiped out because they were in the wrong currency in the wrong country. So it’s not so easy.
So read Stansberry Pacific Research. I will tell you, I, at the moment, own a lot of U.S. dollars. You’re probably going to say, “Why?” We are the largest debtor nation in the history of the world. But in times of turmoil, people look for a safe haven. And for historic reasons, many people think that the U.S. dollar is a safe haven.
So what will happen is the dollar will go higher, get overpriced, could even turn into a bubble depending on how bad things get. And then you sell your U.S. dollars and you get rich. See how easy it is to get rich?
What you should then say is, “Okay, where do you put your money then?” I don’t know because we’d have to see how things evolve. But often, gold goes down when the dollar is going through the roof and markets are collapsing.
If that happens, maybe I’ll put my dollars in gold, maybe I’ll put them in the renminbi. The Chinese say they’re going to make the renminbi convertible in the foreseeable future. They’ve been saying that for eight years. So it might happen. So maybe it would be renminbi, I don’t know. Ask me then, if I’m still solvent. You may not be speaking to me anymore.
Good investing,
Kim Iskyan
Publisher, Stansberry Pacific Research
P.S. This is just a short except of what Jim and I talked about. In our interview, Jim told me the best investment opportunities in Asia (and the world) he sees right now – including the “disasters” he says you should be investing in today. He also revealed why you can’t invest today for 15 years from now… how to know when to sell… and why you should be prepared for a war. You can get full access to my video interview with exclusive replay access to our Asia Wealth Virtual Summit.
Along with Jim, you’ll hear from investing legends like Steve Sjuggerud, Whitney Tilson and Michael Covel on why Chinese stocks could soar in the next two years… how to make money with value and growth investing… why you should follow the trend… and much more. Click here to learn more.
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