Jim Rogers Interview EP. 44
Jim Rogers, one of the greatest investors we’ve had in our time, shares the investing experience he has acquired around the globe and lets us know the details.
He has valuable knowledge from investing in many asset classes and has built a name by looking for asymmetric bets in very cheap markets where he tries to find a catalyst for change.
I’ve got one shot going through this life. I want to make sure I do as much as I can. pic.twitter.com/vvHl4pchpl
— Jim Rogers (@JimRogerBlogs) May 13, 2020
By executing his careful strategy, which he shares in this interview, he has become one of the greatest investors of our time.
Jim Roger’s investment strategies
George Gammon: All right, guys. It gives me a great deal of pleasure to bring someone to the Rebel Capitalist Show that I have a tremendous amount of respect for.
He's been my favorite investor for a long, long time. He needs no introduction whatsoever, his name is Jim Rogers.
Jim, thanks for being on the Rebel Capitalist Show.
Jim Rogers: Thank you, George, but let's stop all the flattery, okay? Let's cut to the chase.
George Gammon: No problem, buddy. We'll get right into it.
Jim Rogers: I will tell you, George, I make a lot of mistakes.
George Gammon: I know, I know, but you've got so much
Jim Rogers: In fact, you want to hear about my first wife? Oh my God, what a mistake that was. Oh, so I make a lot of mistakes.
George Gammon: Right, right. But you got two wonderful daughters right now that made up for it, right?
Jim Rogers: Absolutely, absolutely. Well done.
George Gammon: All right. The first question I have goes back to the book you did with Jack Schwager, Market Wizards.
I think that was late '80s if I'm not mistaken. That was my favorite content you've ever done of audiobooks, videos, everything.
So, my question to start would be in that interview you told Jack that the main focus of your investment strategy was just to wait until there's a big pile of money sitting in the corner, and when you see it, all you do is just go pick it up and it sounds so basic and common-sensical.
George Gammon: Then I've heard you talk to Maria Bartiromo on CNBC when she's trying to ask you some complex question on why you're bullish on North Korea and you simply say, “Maria, didn't your mother ever tell you just to buy low and sell high?”
And so many of my viewer's comments and they say, “George, what's the price of this doing?
What's the price of that, doing? Is the market out of top? Is the market out of the bottom?”
I always say, “Listen. You got to forget all that stuff and just try to buy what's cheap and sell what's expensive.”
But my question is from your standpoint, you used to teach at Columbia as well.
Why is that so hard for people to do from a psychological standpoint?
Jim Rogers: George, what's wrong with you?
Everybody wants a hot tip. I want a hot tip. Come on. This is 2020.
Who wants to wait till next week to get rich? We want to get rich this week.
We want a hot tip that's going to make us rich very, very quickly and we don't have to think about it.
That's part of the problem. Everybody thinks this is easy.
They see guys on the Internet or TV and they say, “Oh, I could have done that. I could have bought Apple.
I could have bought Apple 30 years ago.”
Well, it's not that easy. It's never been that easy for me. I'm not a good trader.
I'm not a good market timer, so I have learned that what's good for me is to wait, wait until I find something that's very cheap, where I know there's a lot of positive change taking place and then I act.
Part of the problem is, George, that everybody wants … If I told you, George, if you told your listeners they could only have 20 investments in their life they would be very careful.
They wouldn't be jumping around all the time saying, “George, what's the price? What do I do?” No, they would be very, very careful.
They would wait. They would research carefully and they wouldn't put their money to work unless they were very, very sure and still they might make mistakes.
But the number of mistakes would cut down a lot if people had some patience or some discipline.
Listen, don't think I don't make mistakes too.
I assure you, I tell you, want to hear about … I'm not going to tell you about my first wife, but I make a lot of mistakes.
George Gammon: Right, but the fact is that you go in and you buy when things are inexpensive, when it's unloved and, therefore, you have a lot of asymmetry in your speculations.
You limit your downside and your upsides, hopefully, a lot greater.
Jim Rogers: I hope. I try. I can give you, let's see, a few years ago … Well, first of all, a few decades ago I went to the Soviet Union and came away thinking, “This is never going to work.”
And so I was pessimistic on Russia for the next 45 years or something.
But then I thought I saw changes taking place and my goodness, it was cheap.
Everybody hated Russia. If you had money in Russia they would put you in jail.
But then I thought I saw things changing. I knew it was extremely cheap with massive amounts of assets, so I started buying Russia.
That's the kind of example now, I mean, agriculture's a disaster. Everybody hates agriculture.
Agriculture in the world has been in trouble for 30 years, 35 years or something.
The Rogers Agricultural Index is down below where it was in 1998. That's 22 years ago. You weren't even born yet in 1998, so no.
There are things now, that's the kind of thing I like to look for, wait for, hope for.
My timing is usually very bad because I'm so horrible at market timing, but that's if I've had any success that's the sort of thing.
George Gammon: Yeah. I know people have most likely heard you talk about Russia in the past, but I want to be very clear with the viewers or listeners that you've made some investments there.
I know you paint kind of broad strokes, but I remember listening to one of your videos back in 2015-16 where you talked about buying ruble-denominated government debt.
I remember hearing you say that, so I went and looked at the charts. I think the ruble was maybe 75, something like that.
Then a couple of years, maybe a year later it went all the way down to maybe 50 or so.
I don't know if you sold then, but I remember looking at the rate of return and it was a 17-18% interest rate that you could buy.
I think that's a more specific example of something you've done recently that's just money laying in the corner.
Jim Rogers: Well, it was, yes. And I'm not here to give hot tips, but one might look at Russian ruble bonds again. They do have high yields.
It's not a credit risk. Russia's not going bankrupt. Whatever happens, it's not going bankrupt. It has very low debt.
Nobody would lend money to the Communists, for goodness sakes.
They don't have a lot of debt like the US, or the UK, or Japan or other countries where everybody loves to lend their money.
No, you might look at it again. It's high yield, who knows?
Jim Roger’s opinion on oil
George Gammon: Yeah. On that topic I want to get your opinion on oil.
You're the commodities guru and we had just an unprecedented drop in oil, as you know, down to negative $40 a barrel.
What are your thoughts on that and what do you see for oil in the short-term/long-term?
Jim Rogers: Well, one clarification. A futures contract went to negative 40.
People weren't buying and selling oil at negative 40, I assure you. If you were in Germany you were paying $20 a barrel and anywhere else in the world.
It wasn't as though you could go down to the gas station say, “Guys, pay me some money to take your gas.”
That was only a futures contract in one specific market. People weren't buying and selling oil.
Yeah, but you're exactly right. George, and I'm going to broaden the question.
As I look around the world at asset classes, commodities seem to be the cheapest asset class around right now.
I could have said that last year too, but it's certainly true through this year. Stocks are not very cheap on a historic basis, bonds are a bubble, bonds are a disaster.
I mean, if one were clever, not that I am, but one might short bonds and go long commodities, for instance, because commodities are certainly very cheap and bonds are not cheap anywhere in the world, certainly not in the US or Japan or places like that.
So, I would expect what's happening with the oil, oil is making a complicated bottom, it has been making this complicated.
We're going to look back and say, “2018, 2019, 2020, '21, '22 oil made its …” You know how bottoms look? I mean, they bump along for a while going sideways, up and down, up and down.
Though I suspect we will look back and say, “Ah.”
And maybe that panic last week was the absolute.
People look back and say, “Well, that was spiked bottom.” There's often a panic bottom, that may well have been it. But I'm not smart enough.
You should watch Rebel Capitalist to get the timing. My timing is no good.
George Gammon: Yeah.
How long do oil cycles typically last?
Jim Rogers: There's no such thing as typically, but historically and traditionally, 10 or 15 years.
They frequently do. In the depression oil got to something like 50 cents. That's not a typo, 50 cents a barrel, not $1.50 or something, not 50 cents a gallon for gasoline.
No, no. A barrel of oil was selling for a few cents. I mean, that changed over the next several years, but you have these, like everything else … Not everything, but most things there are cycles of ups and downs.
Jim Roger’s catalyst technique on investing
George Gammon: Yeah. When you're looking at something that's cheap, going back to that question, or just money that's laying in a corner, I know you were adamant with Jack in your interview that there needs to be a specific catalyst.
I think he brought up the example of Germany and you had just gone in and bought, I don't know if it was equities or it might have just been the broad market.
Because that you thought there was going to be a political change. Or you said the market was cheap and Jack said, “Well, you could have said that for the last 10 years,” and then you brought up the catalyst of this political change and that's why you went long.
When you're looking for a catalyst, whether it's in commodities, or stocks, or just the macro market, what are you looking for to go long?
Then what are you looking for to sell your position as well, because I think that's just as important as when to buy?
Jim Rogers: Well, selling's the same thing.
You look for a change, you look for something that's expensive and often, if you get it right, something will go from dirt cheap to a bubble, or certainly very overpriced over a period of years and everybody gets excited.
I think you probably know what overpriced looks for. Everybody's talking about it. Everybody says it can never go down.
Everybody says, “Oh, don't you know? This time it's different.” Very dangerous words, George, as you know when they say, “This time it's different.”
You don't understand.
Those signs are pretty common. They happen all over the world and all markets when something gets overpriced.
You'll know if it's expensive, you'll know if there's wild enthusiasm, and then if you see something changing for the negative, then you start to act.
At least, that's how I try to act and how I try to sell.
Likewise, when things are cheap, back to Germany in those days. I mean, Russia, I was negative on Russia for decades, but for a variety of reasons I came to the conclusion that there was a change taking place in the Kremlin.
I can tell you why I think it but who cares? I think that I see change taking place.
For 100 years in Russia, they didn't like capitalists, they didn't like rich people. They shot you, or put you in jail, or took your money, and then put you in jail.
But I think I see vast changes in the Kremlin and the psyche of the people, and it was very cheap, and that's why I decided to invest in Russia. That's the sort of thing you look for.
Just trying to think of something. Right now I'm investing in a very, very depressed shipping company because I think I see a lot of strange things happening to the company at the management level. Guy went to jail, for instance. The new manager’s not in jail.
George Gammon: Well, that's good.
Jim Rogers: … I think I see positive changes taking place.
George Gammon: All right. Well, that's a very good example of a positive catalyst right there.
The new management team is not in jail. Go long.
Jim Rogers: Yeah. Well, it takes more than that, but that is a positive side, yes.
What to look for when investing in foreign countries
George Gammon: And I know that when you look at specific countries you really take a top-down approach and then you try to find opportunities within the country on a more specific business, take a bottoms-up approach.
But when you're looking at the macro level if you don't know much about a country or something intrigues you…
What are you looking at first and foremost? Are you looking at their debt to GDP, the demographics? What do you typically look for there?
Jim Rogers: Well, first of all, George, if you don't know about a country, please don't invest.
If you cannot find Russia on a map, please don't invest in Russia. If you don't know how to invest in Russia, please don't invest in Russia until you know a lot, lot more.
What do I look at? Well, it depends. Everything is different.
I once was going around the world on my motorcycle and I crossed several African borders. There were nightmares, corruption, black markets, etcetera.
But across the border, everything was efficient, and worked, and no black market and I knew, whatever this country is, it's different from everything I had seen.
So I went down and in the end, I started investing in that country, so it didn't come from anything.
I told you about Russia. I was bearish on Russia for decades.
Then I saw the head of a major accounting, one of the big four told me, he said, “His clients would rather do business in Russia than anywhere, because it's easy and honest and efficient now.”
I started running into things like that.
The Russians set up a fund. If you wanted to invest in Russia they would invest with you so that if you made money, they made money.
If you lost money, they lost money. They didn't just shoot you and put you in jail anymore, they started losing money with you and they told me it was legitimate.
So I saw changes like that, I thought, I hoped, taking place and my goodness it was cheap. I mean, those are the sorts of things.
You have to look at everything. Is it a debtor country? Is there a big debt?
Russia didn't have much debt. Is the currency convertible? Can you take your money in and out? Russia was convertible.
Are there lots of assets in the government? Russia has gigantic assets. Is there a market? What trades in the market? Are these legitimate companies.
I mean, you have to look at a lot of things.
You said I used to be a professor at Columbia. The kids always wanted, “What's the easy answer?”
I would say, “You can't turn to page 37 and there it is. You can't even read chapter four and there it is.
This is not an easy way to make a living. This is not an easy way to learn how to analyze companies or investments.”
I wish it were. Gosh, George, wouldn't it be wonderful? Wouldn't it be easy?
Wouldn't it be wonderful if we could be lucky? Oh, my gosh, I wish I could be lucky.
Investing in Zimbabwe
George Gammon: Yeah. That's an example of your tops-down approach with Russia.
What was the thought process with Zimbabwe?
I remember hearing you a couple of years ago and I think the catalyst might have been Mugabe, that he passed away and you thought that, “Okay, now's a good time.”
Am I right there or can you walk us through that thought process?
Jim Rogers: Well, I don't want to say that it's good that somebody dies.
George Gammon: Right, right.
Jim Rogers: … but Mr. Mugabe was 95 or 96, had been sick for a long time and he did die.
Now, Mugabe took over in 1980. He was a freedom fighter, a revolutionary, and he got freedom for Southern Rhodesia, it was called then.
Then he proceeded, over the next 35 or 40 years, to ruin the country.
It went from being one of the richest countries in the British Empire to a disaster.
Currency disappeared … Just everything that could go wrong with that country. Then he died.
Now, this was a country with a lot of physical assets. People were hardworking and the cause of the disaster died.
That is not mean, it's great, but you know change is coming. Now you have to figure out if it's a positive change.
Now, the new guy may be as bad as Mugabe, we have to find that out. So far he doesn't seem as bad as Mugabe.
I have started making … Not much, not much because I'm not convinced yet of what's going to happen and whether he really is.
Frequently I have learned that when there is a change like that, the first successor is quite often not the one that you really have to be on.
Because the first successor for whatever reasons, and then they're usually power struggles within the family, or the country, or the politics or whatever. So I am watching Zimbabwe.
I have made a few investments. Not enough to remember or to comment on, but I am watching and, in fact, maybe I should go check right now.
Maybe I'll make some more today.
But that's the sort of thing that is a change and it's very, very cheap. My goodness, Zimbabwe's cheap.
Literally the currency has totally collapsed a few times in the last 35 or 40 years because Mugabe was a disaster. I mean, I guess he was a nice guy. I only met him a couple of times and his wife was a nice woman, but we'll see.
You ask me in three or four years, okay?
Investing in Venezuela
George Gammon: Yeah. No, that makes a lot of sense. If you're looking at a country right now like Venezuela and what's happening there.
It seems like the same thing, the country is just … Who knows if it can get any lower, but it's really down and out.
But you've got this leader there that might be a catalyst if you were to go away for whatever reason.
Would you hesitate there? Because, to your point…
If another guy comes in usually there's a period there that's very volatile, or how would look at Venezuela?
Jim Rogers: Well, I went to Venezuela not long ago to see, and it is a disaster, was a disaster.
The problem with Venezuela, George, for me, I'm a citizen of the land of the free. And they're not very free as you know, so it's illegal for me to invest in Venezuela.
Everybody else can invest in Venezuela. But Americans cannot, because we're in the land of the free.
But it is a disaster and I have learned in my investing career that if you step into a disaster like that, usually four or five years later you look like you were smart.
The catalyst, first of all, it's not legal for me. I want to emphasize again, but if something happens, dramatic, and it usually does when countries collapse, something happens.
People just get fed up eventually, so something is probably going to happen, if it hasn't already, in Venezuela.
And then Venezuela's another country. It used to be rich, it used to be one of the richest countries in Latin America, it's got assets, it's got people, it's got brains, it's got everything.
For what it's worth, the women win beauty contests.
That's not going to make stocks go up, but it's another aspect of the country, so there are assets there.
But again, I hasten to tell you, George, it's illegal for any American to do anything in Venezuela because we're citizens of the land of the free.
Investing in North Korea
George Gammon: Yeah. No, I think it's very important just to really get your thought process and then just people can do with it what they please.
Now, I want to take it one step further and talk to you about North Korea.
Because I know you've been very bullish on North Korea and, with what has happened recently, you call him the kid who's in charge right now.
But I know his health, I've been going back and forth on Twitter and there's rumors of him having a problem with the surgery.
I don't know where we're at right now, but when I first saw that on Twitter I thought, “I got to ask Jim this question.”
Because if he were to pass away, I guess maybe his sister takes over.
I know Jim has probably done a lot of research on this and he'd have some good insights as to what may play out as a result and how that might lead to a potential merging of South and North Korea.
And, if they do, is this the same type of situation we had with East and West Germany?
Jim Rogers: Well, first I hasten to tell you I don't know the kid, I don't know if he's sick.
I don't know if he's at the beach, I don't know if he's in a drunken coma. I have no idea what's happened with the kid or any of them up there.
I do know that you should not listen to American, or Japanese or South Korean propaganda.
You shouldn't listen to anybody's propaganda about anything, but certainly a lot of the information about North Korea is fake news, it's false.
I've been there twice. Not allowed to go now because they changed the rules about Americans, but the kid has been making dramatic changes.
The kid is not North Korean, I mean, the kid grew up in Switzerland.
His father sent him to Switzerland to school. George, would you rather live in North Korea or Switzerland?
George Gammon: Right.
Jim Rogers: I think I know the answer. Well, the kid doesn't want to live in North Korea either but he can't go back, he can't leave, so he's trying to change North Korea.
Many free trade zones, there's an international ski resort, international marathon, all kinds of stuff happening in North Korea now.
He wants to change, China wants it, South Korea wants it, Russia wants the change.
The Japanese are against it, but they can't stop it, so change is coming.
Now, if he dies, I don't know if his sister would take over or his aunt, his father's sister. His father's sister, his aunt, was in power at one time.
The guy she married was in power, but he was executed for a variety of reasons.
In fact, you know he was executed, you read all the things that American propaganda about why he was executed, stealing, blah, blah, blah, and it was all true.
But one of the things in three is womanizing. He was married to the kid's aunt, his father's sister, and he was sleeping with everybody in Korea and everybody in China and he was humiliating the woman.
So she said to her nephew, “Get rid of the guy,” and the guy was a bad guy apparently, but hell hath no fury like a woman scorned.
George Gammon: Yeah. That's the best lesson of today's interview right there, Jim.
Jim Rogers: Yeah, I agree. Hell hath no fury like a woman scorned. So she could make it. I have no idea. He's got an older half-brother.
Do not ask me to even speculate. I don't know. It could be a general. We just were talking about when a generation changes often there's struggles, and who knows what will happen?
My point about North Korea is, both times I went I could see that everybody knew what was happening in China.
Everybody knew what was happening in South Korea. You can't lie to them anymore. They've all seen DVDs, they'd all seen and they knew and the Chinese were all everywhere.
And the Chinese tell them, “Oh, yeah. I have a car. I have a TV. Blah, blah, blah,” so everybody knew the changes.
Everybody wants the changes, so whatever happens, the 38th parallel's going to come down and it's going to open up.
Whether there's unification or not, it's not relevant at this point as far as I'm concerned.
It's the open border that will cause huge opportunities for somebody. The problem, of course, George, is everybody's for it except the Japanese and the American Army.
The only place that the American Army can keep troops on the Russian border and the Chinese border.
The American Army doesn't want to leave and, for whatever reason, Trump still lets the American Army tell him what to do in South Korea.
But it's going to happen. There are too many people in favor of it now. It makes too much sense.
North Korea and South Korea both spend staggering amounts of money on defense, huge amounts of money on defense.
Well, they don't have to do that anymore. They're going to have lots of money to spend on schools, or highways, or K-pop, whatever they want.
And then from just as a learning tool, can you describe why you were bullish on the two merging?
I'm not saying that they will.
But as a thought experiment, because I know you're talking about the North Koreans have a lot of very educated people, which I don't think many outside of North Korea realize.
I think they're one of the most educated countries on the Planet Earth, so you've got that workforce, it could be cheap labor.
You combine that with the forces in South Korea with the capital and the entrepreneurial know-how and the technology, and that could be a really powerful force.
I think that was your point, but I've love to hear you expand on that.
Jim Rogers: You said it better than I do. Yes, the North Koreans spend a huge amount of money on education.
I mean, their universities there, there are all kinds of technological universities there, all sorts of things.
For whatever reason, for most Asians education's a very high priority. It certainly was for the Koreans on both sides of the border.
They're educated, disciplined. Oh my God, the North Koreans are disciplined. Educated, disciplined, hardworking, they have to be, with lots of natural resources.
As recently as 1970 North Korea was richer than South Korea.
Now, communism and the Kims can ruin anything and they ruined North Korea. Now it's a disaster. But, they're right on the Chinese border, natural resources, cheap disciplined labor.
And South Korea has lots of access to capital, and they have great manufacturing and marketing ability.
It's 80 million people on the Chinese border, I mean, it's going to be very, very exciting once that 38th parallel opens up.
That's why Japan's against it. Japan can't compete. Japan's in decline. Japan has serious problems and they know it.
They know they will not be able to compete with an open Korea.
We can get on about Japan too if you want to, but that's what's going on in Korea and that's why, once the 38th parallel opens, it's going to be very exciting.
Now, I hasten again, George, I'm an American citizen.
I cannot invest in North Korea and Americans are not allowed to invest in North Korea. Most other people can, but not us, not Americans.
Japan’s market bubble and it’s similarities to the U.S. bubble
George Gammon: Well, you brought up Japan and I definitely wanted to talk about that briefly.
Going back to your interview with Jack Schwager.
I remember it actually had to be in the late '80s because you talked about the bubble in Japan that was brewing. Of course, hindsight's 20/20, but that was just a magnificent call.
And what really was amazing to me is you not only kind of called the bubble, but you were short the bubble.
And then I think you also called the bottom too because you're talking to Jack and you said, “I don't know if it's going to go from 30 to 20, it may even go down to 12,” and I don't have a chart in front of me, but it got close to 12 and pretty much stayed there.
That was a heck of a call.
Jim Rogers: It did go to 12. I mean, sometimes I get it right. It went to seven, it went to about eight or nine in 2011.
I started buying Japan and then the tsunami hit. Well, tsunami's a disaster, but back our earlier conversation, so stocks collapsed again.
I was already buying. I couldn't believe how wonderful this was, so I started buying Japan. It went to seven, 7,000, so I started buying Japanese shares.
George Gammon: This was after the crash?
Jim Rogers: No, this was 2011.
George Gammon: Okay.
Jim Rogers: This was 21 after the collapse. No, no, no. It was many years later.
George Gammon: Okay, got it. So I wanted to go back to when you were talking with Jack and ask you, I mean, you were just adamant that there was a bubble.
There was no doubt in your mind.
I wanted to ask you what you saw that made you believe that it was a bubble, number one, and then if you see any similarities with the US market as of two or three months ago?
Jim Rogers: Well, all bubbles look the same, George.
It doesn't matter where they are or when in history. In Japan a golf club membership costs more than a condominium on Park Avenue.
George Gammon: Back in the late '80s?
Jim Rogers: Yeah, yeah. Everything skyrocketed.
The Imperial Palace, where the Emperor lives, that plot of land in Tokyo was worth, theoretically, worth more than the entire state of California, the property.
I mean, these sound insane and they are, but this is what happens in bubbles. And people were telling you, “This is normal. You don't understand the Japanese.
They're different from we are.” I said, “They don't put their trousers on one leg at a time?
What do you mean they're different?”
Just going on and on about how the Japanese are different and you don't understand the mentality and blah, blah, blah.
George Gammon: And also, Jim, I'm sorry to cut you off, but I just want to make sure everyone understands.
The bulls back then we’re also saying that there were some accounting differences as to why the multiples in Japan were actually justified.
Because I think that nowadays we look back at that and say, “Wow, how could you not see that it was a bubble?”
But just like now there were plenty of bull arguments for the market continuing to go up.
Jim Rogers: Every bubble in history, George, they're all these arguments about it's different, whether it's the accounting, it doesn't matter what it is.
People will come up with reasons about why it's different and nuts like me will sit and say, “Do you really believe that?”
And you know what? They do, they really do believe that. Because everybody believes it and that's one of the definitions of a bubble.
Skeptics get hounded, laughed at, ridiculed. The US market in December or January weren't that bad, was not nearly as bad, but it certainly was a bubble.
The US market had been going up for 10 years. There at the last three months, as you know, it skyrocketed, had a blow-off kind of thing, but everybody was convinced it was going to go on forever.
Always something comes along to pop a bubble. This time it happened to be the epidemic.
I mean, you ask me, the reaction's been nuts, overblown and crazed, but who cares about what I think?
The facts are, and I have to live with the facts, the facts are it's closed down the world.
George Gammon: Yeah.
At what point would you consider the S&P cheap?
Jim Rogers: Well, it depends on what's happening in the world. I mean, if America's at war with Iran it would have to be very cheap.
If it's just a collapse, a normal air market collapse with everybody giving up and panicking, that's another thing.
That's a question I cannot answer. George, you should watch Rebel.
George Gammon: All right, no problem.
Jim Rogers: It's a program. You watch Rebel Capitalist, okay?
Teachings on how to have a historical perspective
George Gammon: That's right. No problem. Okay, so let's go back to your days at Columbia and try to use this as more of an instructional question.
I know back then you would have your students look at charts.
I know you're not a big fan of technical analysis or anything like that, but you would have them look at charts and see anomalies going back to the 1800s.
I think even further back than that, in different commodities, and stocks, and markets.
Then you'd have them try to figure out why the anomaly took place and what could they have done to foresee it happening?
Do you still think that's a good approach for someone that's trying to learn how to invest in today's day and age? Would you have them do the same type of thing?
Jim Rogers: I did not have them look at charts as chartists.
I had them look at the chart to get the historical perspective so that they could see.
“Oh, this stock or this whatever shot up at such-and-such a time.” Why did it shoot up? What caused that and how would you have figured it out.
In fact, if you go back and look at cotton in 1861, cotton went from half a cent to a dollar in six months.
Now, you might know why cotton…
George Gammon: I don't.
Jim Rogers: Well, the war between the states broke out.
George Gammon: Oh, right.
Jim Rogers: … in 1861. The South fired on Fort Sumter and so given that a lot of cotton came from the Southern states, the price of cotton when from half a cent to a dollar.
Now, I was not long. I wish I'd been around for that. It would have been a fantastic move for anybody who had the good sense to foresee what was coming and that's this kind of thing.
I said, “Okay, guys. Look it up and see what happened.” Most people like you don't know why and now you understand why that happened, but there's always a reason that things happen and if you can figure them out in advance, you'll make a lot …
We can all figure them out afterward. That's easy.
But that's the sort of thing I was trying to teach them to do. “Okay, let's see what's happened,” and the chart just shows you what happened.
Cotton went from half a cent to a dollar. “Okay, now let's figure out why it went from a half a cent to a dollar.”
You name it, university computer in the late '60s, anything with computing in the name skyrocketed, so then you would look at these charts and figure out why.
What was happening to cause this kind of action? That's what I was trying to teach them.
I wasn't trying to teach them about charts, I was just using the chart as a historic record, as a place to start.
George Gammon: Yeah. Just one quick question on top of that, did you ever learn to play squash?
Because I know that's why you took the job.
Jim Rogers: Well, I took the job, I played squash and tennis every day until my rotator cuff, I didn't know I had a rotator cuff. My rotator cuff went out so I had to stop.
George Gammon: Right. Okay, now I know that when you're talking about the Japanese market.
Just going back to that speculation, that you were concerned and you didn't want to ride it all the way down to 12 or seven.
I think you said you were going to get out around 20 because you thought the Japanese might pull some tricks to make it hard for you cash in on the trade.
My question that might be more applicable to today, I know back in March when the S&P was hitting its lows because of the virus, there were a lot of talk about the market closing. In fact, for three months, six months.
If we start to go down again in S&P, do you think something like that may happen, that you would be a little more hesitant to short the market because you might have problems cashing in on that?
Jim Rogers: Well, I'm not going to pick on any particular nation, but throughout history countries have, and exchanges have, changed the rules when things go along.
And George, you have to remember, the members are the most important.
Forget the investing public. We got to take care of the members of the exchange first and they change the rules, or countries change, government change the rules.
Is this good? No, of course, it's not good. Is it free-market capitalism? No, it's not free-market capitalism. Is it crony capitalism? Of course, it is, but it happens.
And if you're not aware that it can happen you can get caught in trouble.
So you should always be prepared that somebody might do something out of the blue that's not good for you.
So you have to watch to see who is getting hurt and who is benefiting and be ready, be prepared.
The two most exciting cities in the world
George Gammon: Okay, now going back to the countries.
I know I'm skipping around here a lot, I apologize. I'm personally, right now, I don't know if you know this, but I'm in Medellin, Colombia.
Jim Rogers: You're in Medellin now?
George Gammon: I am, yeah. Yeah.
Jim Rogers: Medellin is going to be one of the three or four most exciting cities in the world.
George Gammon: Yeah, I know.
Jim Rogers: How'd you know it?
George Gammon: Well, I've heard you talk about it a few times.
Back in 2012 I retired and when I did, you were one of the first investors that I started to study.
So a lot of the investments I've made, which I've actually done very well with, was a result of kind of taking your advice and trying to understand.
“Okay, how does Jim do this?” And kind of following the same path.
Now, I came to Medellin and started investing in 2015, before I heard you talk about it, but I've been investing in real estate here since then.
I actually, maybe a couple of months ago, I heard you talk about your interest in Medellin, and then also another town, I believe it was on the border of China and Russia.
It's a port town and I was wondering if you could expand on that a little bit?
Jim Rogers: Medellin is going to be, as I have said more than once, one of the most exciting cities in the world.
You're there, you know what's happening. You can see it.
If you've bought property five years ago, you're rich. You should send me royalty checks. I've got nothing out of giving you advice.
The other city, there are two cities in the world that I can name, mainly two. The other one is Vladivostok, which is the Soviet Russian Pacific port, it's on the Pacific Ocean.
It's a major port out there. In fact, the first time I was going around the world on my motorcycle in 1990 it was closed to foreigners.
Foreigners couldn't go there. Crazy me, I slipped in. My girlfriend and I went in and if we'd gotten caught we'd still be in jail.
Fortunately, we didn't get caught.
But Vladivostok, which has always been the major port on the Pacific for the Russians, if you get out a map you will see it's right there where Russia, China and North Korea come together, major port.
Putin has decided to make it one of the great cities of the world, has a university there. He wants to make it the Oxford of the world.
He wants to make it a new Oxford, or certainly an Oxford of Russia.
He's spent huge amounts of money on infrastructure. They opened a highway from Vladivostok to Europe now.
The two times I drove across Russia there was no highway, it was a swamp out there in the middle of Siberia.
But now there's a highway. You can drive all the way to Europe from Vladivostok. North Korea's changing. China's putting a lot of money into Northeastern China for a variety of reasons.
Russia, you've heard me talk about Russia. So Vladivostok is going to be very, very exciting.
It's going to be, to repeat, Vladivostok and Medellin are going to be two of the most exciting cities in the world in this particular time in history.
I guess you must speak Spanish. If you get tired of Medellin, think about Vladivostok.
I guess you don't speak Russian and they don't speak Spanish in Vladivostok. But they do speak Russian and Chinese in Korea because they're all pouring in there.
I'm not the only one who sees what's going on.
George Gammon: Yeah, well as soon as we get this virus in the rear-view mirror I'll definitely put it on my list. I've been to over 40 countries. I love traveling.
Like I said, I retired in 2012, so I've got a lot of flexibility with my schedule and I'd love to go check it out.
Diversification versus fewer careful investments
George Gammon: I want to be very cognizant of your time, Jim, I really appreciate you answering these questions.
But I just have a couple more quick ones here. I'm looking at my list of questions and I forgot to ask one important kind of learning question.
I was wondering if you had any advice for the average investor on how to position, or how to size their portfolio from a standpoint of positions.
I mean, I hear a lot of people say, “Well, I'm 100% in gold,” or, “I'm 100% in silver,” and I thought, “Boy, I don't know if anyone's smart enough to know investing to the point where I'd be comfortable having 100% of my portfolio in one asset class.”
So I wanted to hear if you're more of the mentality that you need diversification or you need fewer investments that you should watch very carefully.
Jim Rogers: I have some gold.
George Gammon: Yeah.
Jim Rogers: I have some silver.
George Gammon: There you go.
Jim Rogers: Just in case. Well, George, the answer to your question is there is no answer, it depends on the person.
If you know a lot about gold and you don't know anything about stocks, maybe you should have 100% of your money in gold.
It depends on what you know. If you know a whole lot about cotton and you never heard of Amazon or Google, maybe you should have all your money in cotton. It depends on what you know.
I am not a fan of diversification if you want to get rich. Brokers love diversification because then they don't get sued.
If they make a mistake they say, “Well, you diversified. Yeah, we made a mistake, but …” Then they don't get sued. But Henry Ford never diversified.
Thomas Watson never diversified at IBM. These guys put all their eggs in one basket. They watched the basket very, very carefully, very close.
When they got rich they diversified, but the brokers diversified, their money managers diversified.
But if you want to get rich, which is think is the reason people watch your show. They should pick a few things that they know are going to succeed and invest.
If you don't get it right, you're going to go broke. You'll have to move to Medellin. You can't afford to live anywhere else.
No, if you want to get successful, focus, focus, but be very sure you're right, because if you don't you're going to go bankrupt.
You're going to lose everything. Be aware that you'll lose everything, but if you're an ambitious and hardworking and want to get rich, you have to focus and concentrate your investments.
One question of you. You're in Medellin and marijuana's legal all over Colombia.
Now it's getting legal in many parts, including the United States. You said you have property. Do you have a marijuana farm?
George Gammon: No, I don't. I just do residential.
Jim Rogers: I just want to tell you, it will be a quick story.
Medellin, center of the horrible, horrible drug wars and the stories are crazy.
But I was there once and it was actually at the ex-president's house at a party and I was talking to an ex-general and he said to me: “Well, you know, I spent my whole career trying to put these guys in jail or kill these guys.”
He was talking about the drug dealers. And he said, “Now I am one.” He had a marijuana farm.
He'd retired from the military and become a marijuana farmer.
So I just wondered if maybe you have retired to become a marijuana farmer. It's legal. It's totally legal now.
George Gammon: Right. No, not yet. I know everything grows well here.
They've got fantastic food, fantastic weather. I really enjoy spending time here.
But on that, a lot of people ask me why I moved to Medellin and I didn't really move here, I just really enjoy spending time here.
I like to go around and travel the world and experience other cultures.
On traveling and becoming a better investor…
George Gammon: That's one thing that we didn't talk about.
But one thing I think would be a great takeaway for most people to look at your life and see how you've been able to go to pretty much every country, you did all these records with your motorcycle, and you learned so much. Not only about yourself, but about the way the world works.
Then, through that, how to become a better investor.
I think for Americans that we tend to be very just American-centric.
I think if they had the opportunity to just next vacation get outside the United States, experience a different culture, it would not only open their eyes but it would most likely make them a better investor as well.
Jim Rogers: And a better citizen. Rudyard Kipling, he won the Nobel Prize in fact, for literature, over 100 years ago. He shouldn't have, but who cares.
But he did write a poem, he wrote a poem called The English Flag and in that poem, there's a line which says, “What can he know of England who only England knows?”
In other words, you'll know more about England if you know other places. If you've never been anywhere except England, well you know something.
But you cannot understand England completely unless you know other places as well.
So you become a better citizen of whatever country you are, and a better investor, a better everything if you understand or know something about the rest of the world.
It will surely help you understand yourself. It will help you understand your own country.
It will help you understand a lot of things if you see more of the world.
I don't mean take a tour and go see the Eiffel Tower.
I mean, go somewhere and travel on your own and, for me, for everybody I know who does it, it's a great education.
George Gammon: Yeah. Is your favorite country still India?
You said if people could travel to one place in the world it should be India.
Jim Rogers: Well, yes. I wouldn't want to live in India. I wouldn't want to invest a lot, but it's not my favorite place to invest.
But if you can only visit one country, it's got manmade sites, natural sites, it's got food, religion, languages.
I mean, walking down the street in Indian is a sensory feast. You cannot believe how it's … “Look at that guy. Look at that woman,” I mean, everybody, men, women, it's just an astonishing place.
But I don't want to live in India. But it's certainly, if you can only go one place, George, maybe you should go to India.
If you can only live one place, maybe you should live in Medellin.
George Gammon: Yeah, maybe. But I like Singapore too. I lived in Singapore, well, I was there for almost a year back in two thousand… Was it 11 or so?
And that's a funny story. Actually, before I retired I was an entrepreneur for many years.
I knew nothing about macro. I didn't know what a central bank was. I barely knew what a bond was.
I didn't know anything about interest. I mean, I knew how to make money as an entrepreneur, but nothing about economics whatsoever.
And I almost flunked out of high school. I've never taken an econ class. I've never taken a finance class in my life, just kind of self-taught.
But my point is I remember it like it was yesterday. I was in the Marina Bay Sands in my room and I had about 15 minutes to blow before dinner and I was on YouTube, ironically enough.
I stumbled across a video from Milton Friedman, the Free to Choose series, and that just took me right down the rabbit hole.
And, from there, I started researching Thomas Sole and everything made so much sense. He articulated exactly what had been in my mind for so long.
The very next person after Sole was, of course, Jim Rogers.
Then I got into all your videos and your investment style and you really, like I said earlier, helped me understand the world the way I understand now. And investing.
Another thing, in 2012, just another thank you. Jim Rogers always looks for stuff that's cheap.
I understand that. So what around me is cheap? And in 2012 I looked at a chart of the United States housing market and I took it back to 1900 adjusted for inflation, and I saw that we were coming down right on its historic trend line.
I said, “Well, that's interesting,” and then I listened to a couple of your videos.
I remember you talking about Japan, so I went back to Japan, looked at their chart starting in 1990, and looked at their real estate market went down by 60%.
At the time we were down by about 50, so I said, “Okay, well this might be cheap.”
I looked at the cash flow, that was cheap, so I went almost all in, at very little diversification, in real estate and just these little rental properties, single-family homes in the Midwest, back in 2012, and I did very, very well.
Hopefully, I was able to take the same type of approach as Jim Rogers.
So I looked at the macro first and then I took it down to kind of the micro-level.
Then I guess I went all in and watched it very closely, so that's how I got into real estate investing.
Jim Rogers: Hooray, hooray. You can send me royalties, okay? My children need royalty checks.
George Gammon: All right. Jim, thank you very much.
Jim Rogers: Let's do it again some time. See you on Vladivostok.
George Gammon: Or Medellin.
Jim Rogers: Or Medellin, yeah. Yeah, the problem with Vladivostok is if and when the war comes, you don't want to be in Vladivostok.
It's everybody will be after that port. Medellin is very safe. I mean, nobody's going to fight over Medellin. It's in the mountains. It's very high up.
It's a very safe place to be, so if one is looking around the world and is worried about things like that.
Remember before I said you got to worry about all the things that can go wrong, conceivably they'll be a war.
You don't want to be in Vladivostok if there's a major war because it's the most important Russian port on the Pacific Ocean.
It's right there where China, and Korea and Japan come together.
You don't want to be there, but Medellin, I mean my God, it's in the mountains.
Nobody likes to fight a war in the mountains for goodness sake, no matter how good the beer is, no matter how beautiful the women area. Nobody wants to go to fight in Medellin.
Vladivostok, you don't want to be in Vladivostok.
George Gammon: Yeah, that just reminds me that whenever you say that things get bad in an economy, like they're doing in the United States right now, they always look to blame foreigners.
Whenever I hear that type of narrative in the United States, I just can't stand it.
Jim Rogers: No, I know. It's already happening. I mean, it's astonishing to me.
Well, it always happens. I won't say it's astonishing because I've said it a thousand times, “It always happens.”
You always blame the foreigners when something goes wrong. It's easy to blame the foreigners.
Different skin color, different languages, different food, they smell bad, their food smells bad.
I cannot tell you how many times I've heard, “Their food smells bad.”
I can remember the first time I heard that I was in Cuba in 1977. There were a lot of Russians there, for obvious reasons.
And the Cubans were complaining about the Russians and they were always saying, “And they smell bad,” but then they started telling me that their food smells bad. I'd never heard of anybody saying, “I don't like those people because their food smells bad.”
But now I've heard a million, many, many, many times when people start talking about foreigners.
“They smell bad and their food smells bad too.” But I like it, Latin American food, even if it smells bad.
George Gammon: All right, Jim. Well, I sure appreciate your time.
For anyone who wants to find out more about you or read or buy some of your books, can they still call you? I think your phone number's still five, right?
Jim Rogers: No, It's interesting, it was one of the last 10 cities in America to change.
Now, my phone number till 1965 was five, just five. They have dials in America now. They don't have dials, they have what are these?
Push buttons now, but no, no, no. Please don't call me. You can go online, but I don't have anything to sell. I do have some books.
You can buy my books if you want to, but I don't have anything to sell, George, so sorry.
George Gammon: Well, they're fantastic books.
I encourage everyone to go check them out and Jim, again, I thank you for your time.
It’s really been a pleasure, it's an honor. Like I said, you're my favorite investor and I just can't wait to do it again.