Jim Rogers on Investing in Times of War and Inflation | Investor Hour

subscribe to our youtube channel and press the bell icon to get the latest updates so jim uh welcome to the equity master investor hour uh raul i'm delighted to be here i'm a fan always a pleasure to have you jim i want to start off this podcast uh discussion way back in the 60s when you got started in this world of money if you will and uh the the 60s were a very interesting period i guess the 60s and the early 70s and the 70s uh you had uh you know you had the the dollar peg uh you know break down on the 15th of august 1971 you had the silver price spike you had the gold price spike you had the commodity spikes the oil spikes the reason i want to start with the 60s is probably because 60s and 70s is uh it was a pretty tumultuous period in in hindsight again it was a very tumultuous period uh yeah yeah so yeah so i want to start off with asking you how was it to live through that period in your initial years well well as i look back uh they've all been complicated in difficult periods i have friends who say gosh it used to be so easy and i said never been easy for me i don't ever remember when it was easy you know if they made money they thought it was easy anyway it's always been complicated certainly the 70s were a complicated a period difficult period for many people somehow or another we survived i survived there was inflation there were lots of problems and we have inflation again we have lots of problems a major difference role now and the 70s is in the 70s the united states was still a creditor nation but now the united states is the largest debtor nation in the history of the world so there are differences in the 70s we didn't know about india we didn't know about china in fact now we all know about india we all know about china so there are differences now than there were before yeah so uh to understand a little bit more about your sort of uh career path uh you know uh of course you are you're well known for co-founding the quantum fund uh so and that was founded was the late 60s early 70s 1970 basically 1979 right in the middle there you go so uh talk to me a little bit about that uh what uh i i basically am trying to i've spoken to you in the past and i have a sense of your views and i'm trying to dig deeper in this part long form podcast if you will just to try and understand you the person behind the view and what goes into why is jim the way he is now and why does he give the opinion that he gives now so tell me a little bit about why you quit your job i think you guys are working together not working together you co-founded the quantum fund and tell me a little bit about that period well yes but again that's over 50 years ago when we started the quantum fund you might as well ask me about my first wife but since you asked the question um well for a variety of reasons uh my partner and i were [Music] working on another firm we had a hedge fund but then congress passed some regulation which made it impossible for us to continue working at another firm so we had to start on our own hooray the ray for some bureaucrats making problems uh we started our own we had very little money we were two of us on the secretary when we started but we both loved what we were doing and so we were successful so uh and you were starting a new business in this troublesome time in this chaotic time uh how did you what do you remember let's say let's take one of these examples 15th august 1971 you know nixon goes and says you know we are not going to honor the peg anymore we won't swap the dollars for gold i guess anymore so how was it like living through that period and how did you deal with it when it came to business we didn't have much choice i do remember well because i actually it happened on a sunday night and i had not been aware of until i got to work on monday morning and oh my gosh the world was changing rapidly you know the american stock market was going through the roof there were many problems uh so and we were short america and long japan and japan was collapsing all in one day at that week was a very difficult and complicated week uh in the end of course it was good to be short america and long japan but not that week not that way mr nixon thought he was doing the right thing that remains to be seen many people and history might indicate he did the wrong thing but who cares now it's over 50 years ago and we've all moved on and adjusted what i remember from those days was that you know i loved what i was doing i would love for the market to be open seven days a week i loved it so much that was my passion i spent a huge amount of time but my friend said i was crazy i was working so hard i didn't think i was working i just thought i was having fun your enthusiasm is infectious i must say that so uh going back still with that decision of nixon how much i know you refer to it now but i still want to ask you that question how much do you hold that one particular decision responsible for what is transpired in the world in the last few decades which is a very like a inflationary environment if you will not in terms of a typical inflation number but liquidity in terms of money supply over the decades well there are those who say that you know when when nixon took us away from gold convertibility before if you showed up at the treasury and you were the bank of india safe the u.s would give you gold if you brought in some u.s dollars nixon said no no we're not going to do that anymore so there are those who say that that was at least a constraint on the us government if they had the threat that somebody would come in and ask for gold once that constraint was removed then the theory is that governments our government the u.s which was the largest in the world could print all the money it wanted the facts are certainly where we have printed huge amounts of money and run up huge huge huge debts since then so there may be something to it the united states at that time was a creditor nation now with the largest debtor nation in the history of the world and the federal reserve the central bank in the u.s prints money all the time yeah and one's hoping everyone's now wondering when they pull when they take the foot off the pedal what's going to happen right if they slow down the printing the world is so used to all that liquidity yes yes and uh whether the gold the quote gold convertibility was a constraint or a restrainer not in those days who knows now looking back on them but we certainly know that there are no restraints on any central banks other than brains there's no constraints at all now and many of them print print i mean we may run out of trees raul they're printing so much money so in that phase uh jim what was the what was your first investment and when did you make it pre in your life what was the first investment what was it and what came of it my first investment going back to back when i was a kid we i used to i had the concession at baseball games to sell peanuts and coca-colas and i made some money and at one point i had a hundred dollars saved up and my father and i went down and bought some calves maybe cows and with the idea we turned them over to a farmer the idea he was going to raise the calves and we would sell them when they were grown and we'd get rich never heard about that money again when i was at on wall street i went back and looked to see what happened in that period of time and i so i realized it was the korean war and everything was skyrocketing in price any any natural resource or commodity uh and i also noticed that oh after the korean war ended or after the inflationary boom ended all commodities collapsed in prices so the reason i didn't hear about those calves anymore was they collapsed and we lost i lost everything i found out later but when i was 12 my first investment i was i bought some baby cows and lost everything i didn't know why until later when i figured it all out and uh that's a very interesting story and when did you put uh uh when did you make your first investment in the stock market or commodity market or whichever market you were looking at yeah in the 60s uh i was working for a man in a grocery store he said oh my friend is starting an insurance company why don't you invest i did i didn't know anything about investing i knew what a stock was but i trusted this guy so i went and bought a few shares i don't know a hundred dollars i don't know what it was i don't remember now uh of shares in this insurance company and didn't hear anything about it i realized later it didn't do well it didn't do well but i do i do know that maybe 10 years or so after i looked it up and it had become begun succeeding and so i got it got my money back oh wow that's nice my first investment experience with first couple were not very good you got your money back that's a big deal a lot of people i talked to on the podcast you know blew up their first investment didn't get anything back got my money back after a long time yes and okay so now i'm going to talk about uh so you're at you're starting the quantum fund and you're starting to do all these great you go on to do all these great things which was the first big call you made when you were at quantum well i don't remember that but i do remember in that period of time must have been probably 1970 i decided that the markets were going to collapse and i sold sure i thought i so sure i wouldn't know i bought puts i bought foot and lo and behold within five months i had tripled my money when everybody else was going bankrupt around me and i and i actually sold my puts on the day the market had bought them i thought i was really smart i said oh boy this is easy i'm going to be rich someday and i waited and i waited for the market to rally which i thought it would it rallied for a few months and then i sold short again but two months after i was short i saw i lost everything i completely lost every i didn't have any staying power got margin calls of course um and interestingly enough role i've shorted six companies they all went bankrupt eventually but i lost everything first the depressing period of time but i didn't have any choice except to keep trying and keep going and start over which i did how did that experience shape you as a investor did you tell me i better first of all told me that market knows a lot more than i do a lot i didn't know about markets and also taught me that a lot of people in the markets did not know much i mean i told you all six of the companies went bankrupt but didn't stop the market from driving those stocks it was up a whole lot forcing me out uh so i realized i better learn more about trading and other people in the markets and better be more careful i better have some reserves i better have some liquidity that reminds me of this statement right uh the market can stay rational longer than you can stay solvent absolutely that margins can stay irrational longer as you can stay solvent okay uh moving on uh 1990s so in the 90s you of course went on that famous bike ride and i just pulled out some numbers 160 000 kilometers and uh in the late 90s you went on a you took a car a customized car i read somewhere and you went around 245 000 kilometers so the 90s i don't know what you know you spend you probably circle the globe how many times if you add up all those thousands of kilometers so uh how did that how did that help shape your thinking in terms of everything life investments anything well all my life i had said to myself i want to go around the world of a motorcycle lo and behold and in fact that's why i retired in 1980 and one of the first things i set out to do was to fulfill my lifelong ambition of driving around the world a motorcycle but you may remember the 80s there was still the cold war the soviet union the iron curtain red china so it was pretty much absurd but i kept trying and i eventually got permission to go through russia to go through china and so off i went i wanted to see the world i wanted to have adventure and lo and behold i did it and had a lot of fun it certainly taught me a lot about the world one of the things i realized was oh communism is dead nobody wants to be a communist anymore if they do they want to be a rich socialist they don't want to be a poor socialist or poor communists anymore so though i could see that the world was changing i see that china was beginning to boom and that led me to the idea that maybe commodities would be a good place to be uh i realized there were various cycles long cycles in commodities so for my next trip i wanted to invest in commodities but i knew i couldn't since i would be driving around the world so i said why don't i invest in an index but there were no decent commodity indexes so i had to start my own in order to invest in a commodity index while i drove around the world well so this is after your uh your bike tour or your car one though the car it was during the car one the late 90s that i wanted to invest in commodities but i couldn't because i didn't know an index it was decent so i started my own index in 1998 1999 so i could drive around the world uh and have commodity investments while i drove wow so a motorcycle trip was 1991-92 i was not interested in commodities then although i did learn by seeing what was happening in the world that commodities might have a new bull market someday and uh the next trip solidified that when you had an index while you were very clear very clear on the second trip what was happening in the world and that demand was growing everywhere india was changing china russia everywhere so you preempted my question because i was going to ask you that when you drove through india and china how did india and china look to you then let's take china first in the early 90s when you crossed it well i in my trip around the world and around china i could see that china was changing dramatically and it was going to be the next great country in the world this is early 90s this was early 90s yeah you know i realized in the 80s but in the 90s when i drove around the world i really could see it you know big time uh china china's the only country in the world that's had recurring periods of greatness great britain was great once rome was great once egypt was great once but china has been great three or four times at the top but they've also collapsed had catastrophe three or four times but they're the only country that after long periods of catastrophe they've started over and risen to the top again i could see after my first trip that that was happening again and it was confirmed very very vividly on my second trip that china was going to be was rising it was going to be a huge huge successful nation and india how was uh how was how did india look then in the early 90s well if you can only visit one country rahul in your lifetime i suggest you visit india it's an astonishing place man-made sites natural sites china had man-made sites but they destroyed most of them during the cultural revolution and other periods of upheaval but indium had all these man-made and natural sights food smells everything the beautiful women smart guys smart women too no if you can only visit one country it should be india but i also realized more and more that india had this unbelievable bureaucracy and politicians who didn't really trust or believe in capitalism uh you know the indians learned capital o bureaucracy from the english and then they took it to a higher plane it should get even worse you know it is very good in some things including making bureaucracy worse than ever and it still does have a very bad bureaucracy as you probably gotten better gotten better but still yeah so yeah that's the one big change that we see in india that it's got much better but it's there you know you're going to come up against the bureaucracy every now and then but uh it's getting better you're you know bang on that so uh uh did did you have an investment view on india those days early 90s i was not invested in india you know india i think it was probably the early 90s in india saw that the world was opening up india decided to open up too they started privatizing but for several years they only privatized one company and that was a bakery so he was taking his time as far as opening up like many other countries in the world yeah thoras privatization was selling small stakes in indian companies but the bakery you're right was sold lock stock and barrel it was a company called i think it was modern bakery or something i don't remember the name but i know that for after when the indian decided to open up like the rest of the world it took a long time it was only one bakery that one company a bakery that was privatized but just as an aside that bakery was bought by what is now called unilever well i'm delighted that somebody made a lot of money off that bakery and it finally was privatized okay so so you've done these trips and uh it's around this time early in early 2000s that you actually relocate to the far east right you actually set up move lock stock in battle to singapore well for many years after my travels in china i you would say to people china china china they always said no no no japan japan japan and i would say if you have children you better have grandchildren you see some chinese they of course said no japanese japanese japanese but anyway i finally had a child uh and i started teaching her chinese but i realized very quickly that if i was serious that i was going to have to take her to a city where she had to speak chinese otherwise you know many people told me oh yeah it works for a few years but then they get they won't speak it anymore because they they're embarrassed they think that all their friends speak english and so they should speak english so we realized that we were serious we had to move to a chinese-speaking city so we moved to asia in 2000 we tried 2003 2004 we experimented with cities and in 2007 we finally moved to singapore full-time [Music] was there any uh other than giving your daughter exposure to china the chinese language uh did you sort of like plan your next not investment per se but your investment horizon being more focused on the far east as a against the developed markets had it did it play any role in that well we moved here specifically so that my children would know asia and speak mandarin but of course once i was in the middle of it i'd already seen what was happening in china and in asia once we were in the middle of it it just was even reinforced over and over again how china how asia was changing dramatically even india yeah even the bureaucracy and india were starting it's a well-deserved uh you know uh view on india that you know our bureaucracy has got in the way of development for so long there's of course a certain element of bureaucracy that is needed for the systems to function but like you said we took the british idea and took it to a whole new level but we're going in the indian bureaucrat's office you couldn't even see the bureaucrat there was so much paper piled up on his desk and all over the office that is the typical indian bureaucrat that's right i know i know i mean i love india with passion but wow yeah when was the last time you came to india oh i don't know i haven't traveled much since the virus it's very difficult no place to go and if there was a place to go you couldn't get a plane so i haven't been to india since at least before the virus a lot of places i haven't been since before the virus yeah things are changing very fast and and i guess uh we are i guess as a as a people we are very optimistic even though we have all these challenges we just think things will be better and we actually are starting to see change on the ground right i i you know one of the things that our western friends tell us always when they come to bombay mumbai is they're shocked that no one stops at the red lights on the traffic lights and it's so dangerous but uh you know what you come now you know bombay's got those close circuit tv cameras all over the place uh and you see people actually stopping before the pedestrian crossing it's it's it's revolutionary if you will well riley yes india has been changing is changing and it's you know it's an astonishing country in many many ways uh and it is getting less bad i won't say it's getting great yet but it's certainly getting less yeah we have a long way to go so we are you know as equity master we are die-hard optimists on india we believe that uh things are finally turning around and it's gonna take time it's gonna take several several many many years to sort of reflect but but we are hopeful yes i see that india is changing and turning around as you put it but raul i've been seeing that for 40 years it's a little you know as recent as 1980 india was richer than china i mean you know the rest of that story that's right yeah yeah that that that's so since you mentioned china and our comparison with india i want to spend the next few minutes talking to you about investing in times of war the one theme that we look at at equity master is that there is a level and it's very visible there's a certain level of tension that is building up in the world you have the russia ukraine thing you have the china taiwan thing india and china have had a skirmish two years ago you know india pakistan always have loggerheads uh and there are more flashpoints in the gulf they're flashpoints right so uh i you know i don't want to sound you know someone who's not concerned but looking purely from an investment angle house over the last four or five decades how have you looked at wars and investing and if you can share some stories of how you dealt with them and how it turned out one of the things i have learned either from experience or from reading is that if you invest in a country at war or civil war and you have staying power you're probably going to make a lot of money if you have staying power unless you get at the beginning of the war but if the war starts winding down or getting long in the tooth it's usually wise to invest in a country at war or civil war but be sure you have staying power because things can go wrong i would like to invest in russia and ukraine now i cannot because i'm an american but i don't know if you you what's what the rules are in india but those are places that i would be looking for investments now if i could and i i have seen that many times throughout history well officially india loves russia so we should be fine well i have to leave that to you i i'm not giving you investment advice i'm just telling you that historically if you invest in a country at war either of them uh you often will make a lot of money yeah could you give could you share a little bit more on this in the from the past from your experience of i'll give you the couple of big obvious ones germany in the 1940s from japan in the 1940s oh my gosh would you be rich if you'd invested in germany in 1946 or even 1945 and likewise japan those are a couple of clear examples of vietnam if you invested in vietnam you know in the 80s say oh after the war was ending uh there are many examples that when there's a war everything is depressed nobody prices are certainly very cheap nobody has any energy or drop or anything else but if you can go in with a clear head and do some research you might find great opportunities for instance right now it's more of the virus but for instance airlines all over the world and anything to do with travel or tourism got demolished well raul i know that we're gonna fly again someday you know we're not gonna take the boat to london we're gonna fly again so maybe they're great opportunities i mean this is not war but this is a disaster or kind of catastrophe and if you find catastrophe or war you might find opportunities yeah and uh jim putting on your commodities investor hat how do you see this cycle playing out i know in the last few weeks there's been a sell-off already in commodities but what's your take on this whole super cycle in the commodities sector how are you looking at it it's been a big rally in commodities uh yes in the last few weeks it's come down to a certain extent but most commodities are still up uh nicely over the past few months if you will corrections are normal in any market you know that as well as i do um in my view we're having a correction uh you know the correction may mean that peace is going to come to ukraine i don't know what it mean if anything it may just be a normal market correction but if it means there's peace coming to ukraine eventually if peace comes it'll be a great time to buy commodities because they'll be down and governments will start printing money again people will think everything is okay and i would buy them buy more well that's a very interesting perspective you know whoever i ask this question to they usually talk of the supply side and they say if the if the war sort of eases down all the commodities supply chains that have got damaged in the recent months they will open up and they'll be up you know a lot of supply and you're looking at that as possibly an opportunity to get in you're not giving advice but generally it's terms of a trend because sooner or later the world will get back to printing money and growth and all and from that bottom you can actually nicely you know relatively low risk trade and seed rise to normal levels you know during war people don't plant much wheat you know ukraine and russia are huge producers of wheat they they're not planting a lot i mean planning some but not like they used to so that would mean that the supply is going to be limited for a while anyway there are changes taking place in the world for instance it looks like we're going to have electric vehicles well electric vehicles use several times as much copper as a petrol vehicle and people have not been opening copper mines so there are changes taking place in supply demand so there may be opportunities yeah that's right uh okay that's about war and and thanks for that perspective very thought-provoking uh let me just go back one thing about commodities um no something agriculture for instance has been a disaster for decades uh all over the world the average age of farmers in japan is 66 in america it's 58 and all over the world they're not i mean the highest rate of suicide in the uk is in agriculture agriculture has been a disaster for a long time so i believe it's going to get better we're not going to have any clothes we're not going to have any food so i would suspect that things will get better in agriculture and other commodities so if i can ask one probing question on that of course we're not giving investment advice and all that uh how does one play agriculture for the long term you my best way of course is to buy a farm and become a farmer uh i'm not doing that i don't i wouldn't be any good at it i'd be hopeless at it but if you can buy a farm you're going to make huge amounts of money on the things you produce your land is going to go up in price everything is going to go right for you if you know how to farm and if you like being in the sun for instance so that's the best way to play if you don't want to do that buying futures if you if you're good at it you'll make a fortune in a week can go broke in a week as well in future so be sure you know what you're doing probably the best way is to buy an index with many studies show that index investing is better than most active managers you can buy companies that would that produce tractors or seeds or fertilizer or something there are various ways to invest in agriculture and other commodities okay okay that's helpful uh let's move to investing in times of inflation again you've seen inflation cycles for decades when you see inflation like what you're seeing now and you could go back in the past and sort of give us context how does it change your thought process when it comes to looking at the way you've invested or the way you're planning to invest incremental funds well normally when there's inflation there's also higher interest rates there are various changes that take place in the world and if you invest in the things that are going up in price you're probably going to make a lot of money uh if you invest in things that are affected by higher prices you're not going to do so well so if you own silver for instance i mean india has a lot of silver you might make money if you own the things that go up in price in inflationary times in inflation yeah yeah yeah especially in inflationary times yeah uh we were talking about how you know you you buy silver you were mentioning my question is that given the given the situation where the u.s has really printed a whole lot of money the world's largest debtor nation inflation is rising rapidly could it be that this time around to get a grip on the situation that is there the federal reserve may end up doing something that could really damage or hurt the growth prospects of the world for years to come so how do you reconcile that in your investment philosophy in the investment process it already has but the one of the great things about the investment world it's always changing which is one of the reasons i like the investment world nothing that you think is going to happen is going to happen the world's always changing and that gives you opportunities and fun at least fine if you get it right going forward yes the us has nev no country in history has ever printed as much money as the u.s is printing now and it cannot be good for the world cannot be good for the us dollar no currency has stayed on top for more than 100 years or so u.s has been up there a long time it doesn't mean it has to stop but you know for instance uh in recent years the us has been if you have the world's international medium of exchange a reserve currency anybody in the world is supposed to be able to use it for anything buy drugs your girlfriend got a car house whatever you want but the us has been changing those rules if washington doesn't like you they put sanctions on you they take your assets away they do whatever they want well many people in the world are starting to wait a minute that's not the way it's supposed to work so some countries are starting looking because of economic and political reasons for something to compete with the dollar in india russia china brazil various countries working that move has accelerated because of what's happened because of this war with the u.s just confiscating people's assets and blocking people's assets so it's going to accelerate to move away from the dollar i don't like this rival i'm an american but it's i can see it's happening it's not going to happen this month don't worry it takes a while but that's going to be a major gigantic change in the world as the world looks for something to compete with the us dollar now your next question should be well what's it going to be i don't know i hope that you can tell me i hope that equity master can tell me because i am looking to see what it is that's going to compete with the dollar in theory it would be the renminbi the chinese currency but that's absurd because the renminbi is a blocked currency you can't just go on the internet and buy and sell remember like you can euros or dollars or something so i don't know what it's going to be it could be the gold coins that are probably on your table in front of you it could be gold and silver it's unlikely because that's very complicated to do that but if things get bad enough fast enough who knows people may try gold again yep okay how would you define your investment style buy low and sell high simplest strategy in the world works all the time problem of course is what's low and what's high [Music] if there's anything i try to find things that are depressed usually if they're depressed they're ignored nobody's paying attention and if you can find something that they know ignored and therefore cheap where a positive change is taking place you might make a lot of money so cheap and change i'm looking for something to sheep a company an industry whatever a country where there are changes positive changes that you play major positive change taking place uh from your long experience can you pick out one such uh experience you had where you picked up something at the bottom and how it played out just for context well come on is in the late 90s you know nobody wanted to merrill lynch the largest american broker at the time closed his commodity department because there was no interest i mean it was cheap and there was people were ignoring it that's one china certainly nobody i told you before everybody said japan japan japan i said no no china china china so i mean those are a couple of examples that have worked what do you think is happening in china now with this whole uh i i was reading the other day i think it's a trillion dollars so it's two trillion dollars of wealth destroyed in chinese tech companies uh where they hit them hard how do you think it's going to play out in the long run a lot of money has been destroyed and internationally in any tech companies in the last few years so it's not just china we certainly have there the chinese market has had a big correction it has have other markets as well and since china since uh tech companies were the most popular in all markets obviously and they were the most expensive obviously that's where you've had the biggest corrections you always do when there's a correction the high flyers go go down the most that's what's happening now some of the things that have happened in china uh i mean i can remember a few years ago going to china every where i went there were all these offices opening up with kids on computers trying to connect people to make loans they'd call you up and say well you need you need a loan okay we'll get your loan then they'd call sally and say raul needs money no credit checks no nothing and they would just put together loans you could see an unbelievable bubble waiting to burst that's beijing has been cracking down on that if you ask me they should have cracked they should never have gotten out of control in the first place so some of the things they've done have been good but it's called stocks to come down dramatically uh this is something we've seen before this is not my first rodeo this is the way the world often works and that's what's been happening in china they've had excesses they've been cracking down on the excesses which has an effect on stocks on you and me and other investors but also come on i mean uh tech companies everywhere have come down a lot they are the high flyers is uh is global tech uh hated enough for people to start taking interest in that well if you know what you're doing of course because they've come down a lot and if we're going to have a big right let's say i'll give you an example let's say there's peace in ukraine then you're going to have a big rally because wheat prices are going to come down oil prices are going to come down many prices are going to come down people will say inflation is okay the central banks will say okay inflation is we solve that problem and they're going to print a lot more money and so you're going to have a big big rally in stocks and investments all over the world not wheat wheat and oil will go down but stocks will go up for a while for central banks to be printing money again and so we could have another big rally maybe the last rally probably be the last rally but that could well happen depending on how the world changes and i don't know if there's going to be peace in urine i just made that a hypothetical suggestion that if something like that happens the consequences would be yeah i was reading somewhere that the russia ukraine war is already an exception usually the wars that have been fought in recent decades they don't last this long they last i think on an average someone said 100 days or something and this one is just carrying on and on and from what i read yesterday we are recording this in about you know around the 22nd of july uh i read just the other day that uh russia has announced that they are expanding their motives for their aims in ukraine so this could go on for long let's see how it plays out right uh well i have no idea it's a it's an absurd war but all wars are absurd they've always been absurd so i don't know how this is going to play out but if something happens and we have peace it's going to have dramatic consequences yeah it's going to come we just don't know when right okay uh another favorite topic if you watch equity mastery you'll find out when yeah i'm sure we got the crystal ball we got the crystal ball right yes no one knows about that anyways uh one of our core themes on the investor hour is talking about asset allocation and the reason we do that is because we believe in the long run it is equally important to get your allocation right than to get the individual trade right right so talk to us about what you think about allocation its importance and if you could share how you do allocation how do you allocate your benefit you try to find the right assets the ones that are going to go up the most and that's how you make money um i told you i look for things that are cheap where there's positive change taking place and if i find something like that whether it's a country or a group then i try to buy if it's a group for instance then i will buy several stocks in that group because if if something is changing for an industry then everybody is going to benefit and so it's i find it's better just to buy everything or as many as you can because the whole interest is going to change if the econom the economics of any industry change that's the way i do it now i don't sit down and say okay i said allocation how much should i have and this and that and the other i just try to find opportunities and act and usually if i find a lot of opportunities who knows that i might wind up with a lot of stocks or a lot of bonds or a lot of india it depends on where the opportunities are i don't do asset allocation i don't sit and say okay i gotta have forty percent in stocks and fifteen percent and bonds the market and the opportunities lead my asset allocation but i don't have asset allocation i'm just telling you how it evolves very interesting so for you the allocation is a result of your investment decision it's not the plan it's a result of what i found opportunities yes well that's one way to do it uh well if i find huge opportunities in commodities and none in stocks i might have 100 in commodities and zero in stocks it just depends on what's going on in the world but in your case of course you you have the decades of experience you're seasoned you're damn good at what you do so you can do that but i guess for a li uh investor it's important to diversify your risk by investing across segments probably i will say to you raul that diversification is something it's not a way to get rich henry ford didn't it didn't diversify henry ford put all his assets into cars and got rich diversification is something that brokers came up with so they don't get sued if they do get sued they win them they can win the lawsuit uh but if you only get rich you fo you put all your eggs in one basket but you watch the basket very very carefully if you're right you're going to get very rich if you're wrong you're going to go broke yeah okay uh okay uh i i had to ask you this question uh maybe we spoke about it a bit uh from your early uh you know career but which has been the single biggest investment mistake uh in your 40 40-50 years of uh doing this well i think i probably told you about it when i uh had a great [Music] short lost success lost everything even though all the companies of issue went bankrupt there was a time in 1980 when i s when oil was going through the roof i shorted oil on a friday over the weekend iran and iraq went to war well that was a big mistake for the price war skyrocketed as you can imagine now you might say that was bad luck no no i'm saying it wasn't bad luck somebody had done their homework and you were good armies were moving that somebody was moving to the frontier to go to war i i didn't know because i didn't do enough homework uh you could say oh that's absurd how would you know but somebody knew that's true okay uh no discussion with you is complete without discussing gold without discussing gold gold yeah so uh talk to us about uh gold just tell our viewers uh the investment thesis or the lack thereof of gold from your perspective well everybody should own some gold and silver um as insurance policies if nothing else i mean i'm an old peasant roll i know that when things go bad i better have some gold in the closet i better have some silver under the bed over there because i know that i need that protection if things collapse so first of all just as insurance but second if you get your timing right you can make a lot of money there have been times when gold has gone through the roof but silver's gone through the roof but that's a matter of timing so my first is everybody should own some as insurance but if you can get the timing right you'll make a lot of money i'm not buying either right now because i expect the correction to continue uh who knows i'm not good at timing but if i i'm going to buy more of both somewhere along the line if i were doing it today i would buy silver silver's cheaper on a historic basis and go but i'm not buying either right now and everybody should know about gold and silver because everybody should own some as insurance if nothing else so you know jim in typically they say in inflationary times you know gold should do well silver should do well but uh this time around uh gold did not really do much at all in fact uh i think it's it's even lower than uh the pandemic uh uh time in uh april it's it's is it lower than april 29th april 2020. i'm a little confused by that because gold made all time highs a few months ago somebody somebody bought a lot of gold they went to all-time highs yeah yeah he overdidn't as i said that was cheaper on historic basis you know gold and silver both have been correcting but a lot of things have been correcting recently oil everything we everything yeah is that is that uh in your view is that like a fear that the world is about to slow down quite dramatically people are like for some reason well i know yes i'm sure the world's going to slow down dramatically we've had central banks raising interest rates cutting back on money printing so yes america's had the longest expansion in its history since 2009 that it could go on for 20 years who knows doesn't have to stop but it's already the longest in history so maybe we're getting closer to the end i said i expect another big rally and that will probably be the last because i see lots of signs you know at the end of any big bull market lots of new people come into the market they call their friends and say oh i've discovered this thing called the stock market it's fun and you can make a lot of money and it's easy it's easy to make money it says spax spikes have been around for 300 years but spots often have another run when the bull markets lasted a long time i mean we've all seen this movie before what about cryptos well did they interest you ever no uh well all money is going to be on the computer it already is in china china you cannot take a taxi with money you have to use your phone to pay you cannot buy ice cream in china with money every country is working on it the chinese are ahead but eventually all money is going to be on on the computer but i don't think for instance when the u.s said this okay here's this is money now but you can use something else if you want to that's not the way bureaucrats think that's not the way politicians think they want control they want to know everything that's happening so uh my view is that if it's successful if cryptocurrency is successful the governments will shut the doubt law at or control it or tax it or something doesn't mean if there's just trading vehicles why not who cares i know people have traded and made a lot of money many of them have already disappeared and gone to zero but if there are good traders i'm not even trying i'm a bad trader and i don't have an interest if i thought someday there was going to be some real use for it i would probably be more interested great so to kind of wrap up i've got this last couple of questions for you jim uh this one of course i guess will wrap up your current views if you if you had a hundred thousand dollars uh lying spare change somewhere in that apartment of yours where would you put it to use well if i had a hundred thousand dollars i'd go to the beach i'd go to bison lottery for a long time uh if i were investing today i would probably i own a lot of dollars as i've told you i don't know if i would buy them now because they've been so strong in recent weeks but i would probably buy [Music] agriculture agricultural index [Music] if i were doing something now i would buy an agricultural index but the problem is i just said i expect a rally to come soon so i would buy commodities uh because they're low and they would probably drop more because people would think okay inflation's over we don't have to worry and i would buy stocks the wilder stocks the better the the what stocks are the wilder you know the amazons though yeah those are the ones that go up the most because those people those people i mean people still think those stocks are great yeah and they're falling the most i guess in some senses i might buy japan i mean i own japanese etfs i probably buy japan uh egf this bank of japan prints money every day and they say they're not going to stop and they print money and buy etf so japanese i own japanese etfs i'd probably buy more if i had a hundred thousand dollars today um things like that okay so uh my in my original you know uh list which i wanted to go through you i was going to ask you which books would you recommend but i'm going to flip that question so uh let's say you're in india and let's say you bump into prime minister modi somewhere or or our finance minister what advice would you give them resign but really resign uh you know mr molly is great he's great pr he's fabulous on tv and talking to people but i don't say mr morty was great when he was a provincial governor but he doesn't seem to have done much since then he talked to him i oh i bought in the indus i thought he was going to win and because he was all always said but i don't see that he has done very much for india now obviously people who disagree with that but no i don't see much i've heard mr movie mr modi i would say listen you've got to deregulate agriculture you've got india has had great agriculture throughout history at times in its history you've got the weather the soil the people i would change all the regulations and controls on agriculture and making india a great agricultural nation again i would close the bureaucracy i would make the currency completely convertible i would make it totally legal for foreigners to buy and sell indian assets uh you know if you want to invest in india it's a nightmare whether it's stocks or the currency or open a shop if you want to open a shop if you're a foreigner india doesn't make it easy i would abolish the bureaucracy i i think that's the pet theme get rid of the bureaucracy all of us agree with you on that no no debate over there okay so with that jim fascinating discussion as always very thought provoking thank you very much for your time i had bet with my colleague you're going to show me a gold coin on the chat but you showed me a silver coin yes it was cheaper it was cheaper right there's the signal right there so thank you very much once again thank you rob let's do it again i hope we do it again sometime or i hope i see you in india yeah that'll be even better and i hope you get through all the bureaucracy or the airport and come perfectly happy this time around i hope you and keep up the good work at equity master okay thank you jim thank you thank you bye-bye

Channel: Equitymaster

Views: 13,397

Keywords: Jim rogers, investor hour, Rahul goel, investing in india, gold, silver, commodities

Id: 5JmDgENQ_u8

Length: 56min 8sec (3368 seconds)

Published: Sat Aug 13 2022