Interview with Jim Rogers

Excerpts from a interview with Jim Rogers

RESOURCE INVESTOR: Jim Rogers started the Quantum Fund with George Soros a couple of decades ago, probably three decades ago actually. He’s a legendary investor. He’s a bestselling author and he’s a prolific commentator and never a day goes by when you don’t see him on Financial Times Television or Bloomberg or listen to him on the wireless and he’s on the wireless now.

Jim, before we get into what’s happening with commodities, which is one of your favourite subjects, what do you think about the recent market action?

JIM ROGERS: Not very surprised. I’m just – the only surprise to me is why didn’t it start sooner. I’m afraid we’re going to see much worse before the year’s over. America’s going to be in its worst recession for some time. We’ve had the worst housing bubble we’ve had in American history, maybe even world history. So, unfortunately, it’s not good news. There’s still many problems to be revealed and more losses to be taken.

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RESOURCE INVESTOR: Yeah, I’ve been writing an article on Allan Greenspan and his tenure for a local magazine, Jim, and I’ve been surprised at looking at some of the quotes that have been attributed to Greenspan ever since he took over as Fed Chairman in 1987. I’ll just read one to you if I may briefly. It says – he said the following back in 2003, 2004, “Innovation has brought about a multitude of new products such as sub-prime loans and also niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country. With these advances in technology, lenders have taken advantage of credit scoring models and other techniques of efficiently extending credit to a broader spectrum of consumers.” I mean the more I read about Greenspan, the more I realize he’s at the root of our current problems.

JIM ROGERS: Oh no, of course he is. I mean he’s laid the foundation for the demise of the Federal Reserve. Between Greenspan and Bernanke, we may see the Federal Reserve fail. We’ve had three central banks in America. The first two failed. This one’s going to fail too. I mean if you really – we could spend a whole program, a whole year of programs, reading quotes from Greenspan and you would realize what a fool he’s been...

RESOURCE INVESTOR: Yeah, let’s do. But briefly, before we leave the subject, do you think that Bernanke is just going to become another Greenspan?

JIM ROGERS: He’s worse. All he knows is to print money. His whole intellectual career has been spent studying the printing of money. America’s now given him the printing presses and all he knows to do it to run them. He doesn’t know about markets. He doesn’t know about foreign currencies. We know now he doesn’t even know about economics. I mean, he’s got a PhD in economics and he was a professor of economics, but he doesn’t have a clue about economics...

So the man doesn’t even understand economics. He’s going to print money. He’s going to throw money out the window. The dollar’s going to go down further and further and further. Inflation’s going to get worse and worse and worse throughout the world – the world, not just America - and we’re going to have a worse recession in the end.

RESOURCE INVESTOR: He says that the inflation problem is a lesser problem than a slow-growth cycle. What would be your comment on that analysis?

JIM ROGERS: Well, no. You know better than that. Inflation damages everything. It distorts all economic planning, all economic decision making. A slow economic profile or whatever he called it – we get over recessions. They end. But once you start embedding inflation into the entire nation’s economy, that’s one thing. Then it changes everything. It changes currencies. It changes foreigners’ perceptions of their own economy, their own currency, their own cost of doing business...

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RESOURCE INVESTOR: Jim, if you want to get into the agricultural market, what is the most efficient way to do it if you don't have the wherewithal to be able to utilize, you know, the Chicago Board of Trade and things like that. Are there indices that one should look at without having to monitor them every day, a simple way of getting in, in other words?

JIM ROGERS: Well, Lindsay, I mean many academics and many consultants have demonstrated over and over again the best way for most people to invest in anything, stocks, currencies, whatever, is through an index. I’m not the first to come up with that and you either. That’s been demonstrated too many times. People who invest in indexes outperform 80% of active fund managers year after year after year.

So the best thing for most people to do is buy an index. I mean first do your homework and decide, “Yes, I want to buy stocks. Yes, I want to buy American stocks. Yes, I want to buy commodities,” whatever it is. And then if you decide you want to buy that asset class, the best way to invest, no matter what the asset class, is to buy an index.

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Jim Rogers is an investing expert.