We’re ready for a rally. I mean, the market in October and earlier this month has had a huge selling climax. I covered a lot of my shorts. Who knows if I’m right or not. But I expect the market to rally for some time. It may rally into next year. But… this is a false rally. It’s not going to be great. It’s not the end of the problems in America and it’s not the end of the bear market.
Jim is also very bullish on CRUDE OIL.
Jim Rogers (FOX News)
November 28, 2008
November 27, 2008
Dollar will be Devalued
The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.
``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers.
The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.'' Rogers talks bearish again on the us dollar.
``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers.
The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.'' Rogers talks bearish again on the us dollar.
November 26, 2008
Jim Rogers Interview
Latest Jim Rogers interview in Fox News. Jim Rogers aldo gave an interview to Bloomberg commenting this November events. He talks about Obama, Gheitner, GM, th dollar, Citigroup, Bailouts and many other things.
Jim Rogers says the a bear market rally is underway and that might even last to next year. Even thought this is not the nd of the bear market in America.
November 24, 2008
Jim Rogers on Oil
Mootley Fool was quoted Jim Rogers on oil. Jim thinks oil will go up eventually and here are the arguments:
"Jim simplifies the equation by saying that we obviously have growing demand for oil over time and we haven't discovered "major" new field in the last 30 years. So I ask the question, is demand for oil falling this rapidly or are falling prices the function of hedge funds selling? Many investors are selling anything they can get their hands on to raise capital. Now I don't doubt that oil may have gotten overdone to the upside, but markets tend to overrun.
Ask yourself another very simple question. Do we have to have oil to operate our economy? Yes we do and this economy will get going again. We have overrun to the downside and will see the demand story emerge very soon. Think about this in terms of "percentage chances". As oil prices fall, consumers will either do more driving or they will have more disposable income to buy goods. How do goods move around the country? It takes OIL. I know that is a ridiculously simple example, but it will materialize quicker than most believe." in Motley Fool
Find several oil forecast and analysis including jim Rogers at the OIL TRADERS BLOG.
"Jim simplifies the equation by saying that we obviously have growing demand for oil over time and we haven't discovered "major" new field in the last 30 years. So I ask the question, is demand for oil falling this rapidly or are falling prices the function of hedge funds selling? Many investors are selling anything they can get their hands on to raise capital. Now I don't doubt that oil may have gotten overdone to the upside, but markets tend to overrun.
Ask yourself another very simple question. Do we have to have oil to operate our economy? Yes we do and this economy will get going again. We have overrun to the downside and will see the demand story emerge very soon. Think about this in terms of "percentage chances". As oil prices fall, consumers will either do more driving or they will have more disposable income to buy goods. How do goods move around the country? It takes OIL. I know that is a ridiculously simple example, but it will materialize quicker than most believe." in Motley Fool
Find several oil forecast and analysis including jim Rogers at the OIL TRADERS BLOG.
November 20, 2008
Latest Jim Rogers Interview: Financial Times
FT: It's a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to get further out of the dollar. Have you made a further exit from the dollar?
JR: Not yet, no. And the reason I haven't is because we're in a period of forced liquidation of everything. We've had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they're all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I'll get to sell at higher prices. I don't know whether I'll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering.
FT: How will you tell when that deleveraging is finally over?
JR: I'm sure I won't get it right, but I do hope that when there's a lot of euphoria about the dollar and everybody's saying, well, see, there's no problem with the dollar . . . I hope I'm smart enough to recognise it and finally get out of the dollar, because it is a flawed and, maybe, even doomed currency.
FT: Do you see the sell-offs we've seen in commodities as a drastic correction?
JR: Well, we're in a period of forced liquidation of all assets . . . we're getting the business cycle effect on demand right now, certainly, but unless the world's in perpetual economic decline, commodities are the only thing going to come out of this OK.
FT: Does this mean you're actually buying back into commodities at the moment, or is this an area you're standing clear of?
JR: No, no. In October when I started covering my shorts in the US stock market, I started buying Chinese shares, Taiwan shares. I started buying commodities again. No, no, I've added to those positions.
FT: What's your strategy towards emerging market stocks?
JR: My hope is that I'm smart enough and brave enough at some point along the line to buy some of them back. But I'm not even thinking about it right now . . . The world's financial situation is in a mess, and there are a lot of people who have to liquidate. I mean, we must have had 30,000 MBAs flying around the world looking for emerging markets. All of that money has got to come home.
FT: How do you think the world should go about redesigning the regulatory system, and are you worried that we're going to end up with a swing towards over-regulation?
JR: Well, we probably will. The problem is that people like Alan Greenspan would never let the market work . . . For 15 years, under Greenspan, and now Bernanke, they would not let the market work. Had they let Long-Term Capital Management fail, back in 1998, we wouldn't have these problems now, I assure you. Lehman Brothers would have been smashed. Goldman Sachs, Bear Stearns, would have been smashed. We wouldn't have these problems now. That only happened because every time they turned around they propped these guys up, gave them more money, and that's why we have the problem. . . . But now, of course, they're going to blame it on other people and cause more regulations.
FT: You're arguing we need to allow some more big institutions to fail?
JR: One failed. Why didn't they let Fannie Mae and Freddie Mac? I mean, I was short Fannie Mae, and they should have let it fail, go zero. AIG - they should have let it fail. They should have let all of these guys fail, and we would clean out the system . . . What they're doing is, they're taking the assets away from the competent people, giving them to the incompetent people and saying to the incompetent: 'OK, now you can compete with the competent people, with their money.' I mean, this is terrible economics. This is outrageous economics.
Jim Rogers is an investor and author and founder of the Rogers International Commodity Index. Read all Jim Rogers `s interviews and comments here, watch all Jim Rogers videos. Follow his outlook on commodities, stocks, the dollar and much more.
JR: Not yet, no. And the reason I haven't is because we're in a period of forced liquidation of everything. We've had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they're all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I'll get to sell at higher prices. I don't know whether I'll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering.
FT: How will you tell when that deleveraging is finally over?
JR: I'm sure I won't get it right, but I do hope that when there's a lot of euphoria about the dollar and everybody's saying, well, see, there's no problem with the dollar . . . I hope I'm smart enough to recognise it and finally get out of the dollar, because it is a flawed and, maybe, even doomed currency.
FT: Do you see the sell-offs we've seen in commodities as a drastic correction?
JR: Well, we're in a period of forced liquidation of all assets . . . we're getting the business cycle effect on demand right now, certainly, but unless the world's in perpetual economic decline, commodities are the only thing going to come out of this OK.
FT: Does this mean you're actually buying back into commodities at the moment, or is this an area you're standing clear of?
JR: No, no. In October when I started covering my shorts in the US stock market, I started buying Chinese shares, Taiwan shares. I started buying commodities again. No, no, I've added to those positions.
FT: What's your strategy towards emerging market stocks?
JR: My hope is that I'm smart enough and brave enough at some point along the line to buy some of them back. But I'm not even thinking about it right now . . . The world's financial situation is in a mess, and there are a lot of people who have to liquidate. I mean, we must have had 30,000 MBAs flying around the world looking for emerging markets. All of that money has got to come home.
FT: How do you think the world should go about redesigning the regulatory system, and are you worried that we're going to end up with a swing towards over-regulation?
JR: Well, we probably will. The problem is that people like Alan Greenspan would never let the market work . . . For 15 years, under Greenspan, and now Bernanke, they would not let the market work. Had they let Long-Term Capital Management fail, back in 1998, we wouldn't have these problems now, I assure you. Lehman Brothers would have been smashed. Goldman Sachs, Bear Stearns, would have been smashed. We wouldn't have these problems now. That only happened because every time they turned around they propped these guys up, gave them more money, and that's why we have the problem. . . . But now, of course, they're going to blame it on other people and cause more regulations.
FT: You're arguing we need to allow some more big institutions to fail?
JR: One failed. Why didn't they let Fannie Mae and Freddie Mac? I mean, I was short Fannie Mae, and they should have let it fail, go zero. AIG - they should have let it fail. They should have let all of these guys fail, and we would clean out the system . . . What they're doing is, they're taking the assets away from the competent people, giving them to the incompetent people and saying to the incompetent: 'OK, now you can compete with the competent people, with their money.' I mean, this is terrible economics. This is outrageous economics.
Jim Rogers is an investor and author and founder of the Rogers International Commodity Index. Read all Jim Rogers `s interviews and comments here, watch all Jim Rogers videos. Follow his outlook on commodities, stocks, the dollar and much more.
November 18, 2008
Jim Rogers in the World Money Show
"There was a climax selling in October, the US markets were down 18% in a week. In history when you buy into a selling climax you always make money. Let`s see in 2, 3 years." Jim Rogers
"I am buying, Taiwan, China and agriculture" Jim Rogers
Jim Rogers said that Mexico, Malaysia andd the UK will be importing oil within a decade. This will be very bullish for oil prices.
Rogers Speaks in London
Jim Rogers was in London last Friday were he gave a speech. Jim Rogers latest comments were about the declining pound sterling, and the shorting of the US government bonds. Here are his most remarkable comments:
"The central bank in America had made it clear that it will not let anybody fail, and that has helped create this huge amount of loans".
Jim Rogers traces the troubles back to 1998, "LTCM should have failed and had they let it fail, we would not have had so much, if any, of this gigantic creation of toxic waste. Bear Stearns and Lehman Brothers would not have been able to write all this junk."
"Greenspan refused to let them LTCM fail, then he printed huge amounts of money, which led to the dot-com bubble, then after that bubble popped he printed huge amounts more money to goose up housing and consumption."
Europe: not much better
Jim Rogers about the UK and the Pound Sterling
"The financial system here in the UK is maybe in even worse shape than the US," Jim Rogers said. "Look at Northern Rock, it got into trouble, there was a run on the bank, people were taking their money out and putting it in Barclays and Royal Bank of Scotland instead."
"Then the government stepped in and bailed out Northern Rock, so everybody started taking money out of other banks and putting it back into Northern Rock because it was the only totally secure bank. That weakened the other banks so the government had to come in and bail them out too - it's the same idiocy that prevailed in the US."
"The City of London is pretty much finished, he asserts, and if you're alarmed by the recent slump in sterling, you ain't seen nothing yet."
"In a decade, you're going to be importing oil again - what's going to hold sterling up when you're a net importer of oil? You've already got a balance of trade deficit. I've sold all of my sterling... there are no fundamentals to support sterling as far as I can see."
Asia and US Government Bonds
Once Asian central banks cease buying US government bonds, all bets will be off. When will that be? "I don't know, and I don't know why they keep doing it... I certainly wouldn't - I'm shorting US Treasury bonds," he says, and adds the current revival in the dollar is just a short squeeze in the midst of a long, secular decline. "The President has said the dollar is strengthening because it's a safe haven. That is just balderdash. The US is not a safe haven, it's a rolling bankrupt."
"All the creditor nations are in Asia now. The five biggest creditor nations are China, Japan, South Korea, Taiwan and Singapore - and throughout history, financial centres have gravitated to where the money is."
"The central bank in America had made it clear that it will not let anybody fail, and that has helped create this huge amount of loans".
Jim Rogers traces the troubles back to 1998, "LTCM should have failed and had they let it fail, we would not have had so much, if any, of this gigantic creation of toxic waste. Bear Stearns and Lehman Brothers would not have been able to write all this junk."
"Greenspan refused to let them LTCM fail, then he printed huge amounts of money, which led to the dot-com bubble, then after that bubble popped he printed huge amounts more money to goose up housing and consumption."
Europe: not much better
Jim Rogers about the UK and the Pound Sterling
"The financial system here in the UK is maybe in even worse shape than the US," Jim Rogers said. "Look at Northern Rock, it got into trouble, there was a run on the bank, people were taking their money out and putting it in Barclays and Royal Bank of Scotland instead."
"Then the government stepped in and bailed out Northern Rock, so everybody started taking money out of other banks and putting it back into Northern Rock because it was the only totally secure bank. That weakened the other banks so the government had to come in and bail them out too - it's the same idiocy that prevailed in the US."
"The City of London is pretty much finished, he asserts, and if you're alarmed by the recent slump in sterling, you ain't seen nothing yet."
"In a decade, you're going to be importing oil again - what's going to hold sterling up when you're a net importer of oil? You've already got a balance of trade deficit. I've sold all of my sterling... there are no fundamentals to support sterling as far as I can see."
Asia and US Government Bonds
Once Asian central banks cease buying US government bonds, all bets will be off. When will that be? "I don't know, and I don't know why they keep doing it... I certainly wouldn't - I'm shorting US Treasury bonds," he says, and adds the current revival in the dollar is just a short squeeze in the midst of a long, secular decline. "The President has said the dollar is strengthening because it's a safe haven. That is just balderdash. The US is not a safe haven, it's a rolling bankrupt."
"All the creditor nations are in Asia now. The five biggest creditor nations are China, Japan, South Korea, Taiwan and Singapore - and throughout history, financial centres have gravitated to where the money is."
November 12, 2008
Jim Rogers: We may be hitting `a' bottom
Jim Rogers stated in a Seoul conference that bonds will be a very bad investment in the next 10 to 20 years and that economic problems may persist until 2010.
"Stocks markets in the West are still expensive on any historic valuation method", Jim Rogers added. Markets (stocks) in the West will be stuck "in a trading range for years", Jim said.
"I have started going back into the markets but that does not means it's the bottom'' Jim stated. He is buying commodities and stocks in China and Taiwan and a Korean stock since mid- October.
"We may be hitting `a' bottom, I don't know if it's "the" bottom"
November 11, 2008
Exclusive Video Interview in Amsterdam
In his latest video interview Jim Rogers speaks about Mexico, Germany, Iceland, U.S., Gold, and farmland. US Long Term Government Bonds are his short play.
November 10, 2008
Jim Rogers Gold Outlook
"The IMF has gigantic amounts of gold," said Rogers
"Maybe gold is going to go down for a while. If gold does go down, I'm going to buy more."
Jim Rogers will be presenting at World Money Show London on Friday. He will adress the audience with a workshop called How I See the World Today and What I Am Doing About It. His presentation will begin at 11:15 AM.
The housing market is in decline
"The stupidest thing you can do right now is to sell a farm and buy a house in the city instead. The housing market is in decline." Last friday Jim Rogers went at it in front of a roomful of ABN Amro private banking clients.
Jim Rogers will be in London this friday in a World Money Conference. Recently he gave his Oil Outlook in the Oil Traders Website.
Jim Rogers will be in London this friday in a World Money Conference. Recently he gave his Oil Outlook in the Oil Traders Website.
November 4, 2008
Jim Rogers says the United States are bankrupt
The United States are bankrupt, so says Jim Rogers. "The American government bonds are the world’s last bubble and the price of commodities has to increase."
These were Jim Rogers comments in an ABN Amro conference in Amsterdam last friday, 31 th October.
His most important points:
Jim Rogers US Government Bonds Outlook
America is bankrupt. American government bonds are extremely overvalued. "The world’s last bubble." America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”
Jim Rogers`s US Dollar Outlook:
"The fact that the dollar is gaining rapidly is only temporary", Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.”
Jim Rogers`s Outlook on Oil (Jim bought oil yesterday as a matter of fact)
Rogers: "Whether oil costs 45 or 145 dollars, it doesn’t really matter. What does matter is that with oil, like with many other commodities, supply is decreasing while demand is increasing. In the long run this will result in a considerable increase in prices."
"The question is not if the price of a barrel of oil will increase again, but how expensive a barrel of oil will be eventually?"
"The oil supply will fall with 6 to 9 per cent each year, according to the IAE. The demand for oil will increase in China and developing countries. This has nothing to do with economy, the market is simple. It is simply the law of supply and demand."
Jim`s forecasts for oil as well as Boone Pickens and many others experts can be found in the Oil Traders Blog.
Jim Rogers`s outlook on inflation
"People don’t understand that the commodity-market will be bullish, this will lead to high inflation." Commodity prices will be a lot higher in the future than they are now. "The world is going to change, there is no way around it. If you don’t understand that and you don’t adapt you will be suffering in five years. The Chinese see on TV how we live in the West. They want that too! That generates an enormous demand for products and materials."
"All countries in the world have been printing money, the United States in particular. That created a huge amount of money, resulting in the icing on the cake for commodity prices. But fundamentally you have to look at supply and demand."
Jim Rogers`s Outlook on The United States
Rogers has been negative about the United States for a long time. "You should be worried, America is out of control". The enemies of the United States are currently looking into how to profit from the weaknesses of the United States. When we asked him: Obama or McCain? he answered: "Neither of them. They are both turkeys, they take the wrong decicions."
Bernanke or Trichet?
Rogers is not a big fan of Bernanke, the president of the Federal Reserve. With a big smile Rogers tells us: "Bernanke will continue to print money until there are no trees left in America."
He is more positive about Trichet of the ECB. At least he knows what he is doing and what it’s all about.""
Jim Rogers on the Banks Bailout:
Rogers is fiercely against bailing out the banks. "That has never worked. Let them go bankrupt. Right now bad-managed banks are saved with money from good banks and from you and me. After that, the failing but nationalized banks are going to compete with the well-managed banks and they gain their market share. Ridiculous. The Bail-out plan is a disaster. In 1929 we had a recession but after the government interfered, it became a depression. You should not interfere."
Jim Rogers`s Outlook on the Stock Market:
Rogers: "You can make good money with stock-picking, perhaps even more than with commodities, but only if you pick the right equity at the right moment. The stockmarket in the west is still too expensive. But the market is extremely volatile. In the five years to come you can earn money with trading ranges".
Jim Rogers`S Outlook on China and Russia
"Do know know what the problem is? When at work, the Chinese people ask when they can work and what they can do. We ask how day's off we have. That’s a big difference."
Rogers has bought Chinese stocks in the last few weeks. "I don’t know if we have reached the bottom, but the market is low. I am a bad timer, by the way."
"My daughter is five years old and she speaks Mandarin fluently. After the dollar has collapsed as a world currency, there is only one currency that could take over that role: the renminbi. That could happen in 15 to 20 years. Other currencies cannot take over the role of the dollar, including the euro." ~
Rogers`s Russia Outlook
The former Soviet Union will be split up in even more smaller countries. And with that, there will be some wars." "In Russia you are lucky if they kill you right away. You are unlucky if they first arrest you, then keep you in prisson for 15 years, torture you and kill you after that". He joked.
"What you see thereby is that the Russians take their capital abroad, while the Chinese take it home."
Jim Rogers on Gold and Silver
“Silver will do better than gold,” Rogers, chairman of Singapore-based Rogers Holdings, said on Monday in an interview in New York. “It’s been beaten down horribly. If you put a gun to my head and said you have to buy one, I would buy silver rather than gold.”
Gold may drop as central banks and the International Monetary Fund (IMF) may sell the metal to raise cash, said Jim Rogers in New York.
The International Monetary Fund (IMF) in May ratified a plan that included proposals to sell 403.3 metric tons of gold to reduce a budget deficit. That Gold might be coming to the market depressing prices on the Gold Exchanges.
The IMF has gigantic amounts of gold,” said Rogers, a cofounder with George Soros of the Quantum Hedge Fund. “Maybe gold is going to go down for a while. If gold does go down, I’m going to buy more.”
The IMF’s gold-sale plan needs legislative approval from member countries including the US before it can be carried out. The lender is the third-largest holder of gold reserves, with a total of 3,217 metric tons valued at about $90 billion. The US has the most, followed by Germany.
The recent decline in raw-material prices is a short-term correction and doesn’t signal the end of the commodity bull market, Rogers said. The Reuters/Jefferies CRB index has plunged 44 percent from a record in July, including a 22 percent drop last month the biggest since 1956.
Supply constraints and inflationary pressures will boost agricultural, energy and metal prices, he said. “All the commodities are going to go higher,” Rogers said. “Everything’s been killed and they’re due for a rally.”
China’s emerging middle class make that country a better bet for stocks than the US and a driver of commodities demand, Rogers said later at the Inside Commodities conference in New York. Rogers, who has moved to Singapore, said he’s buying Chinese stocks and his young children are learning Mandarin because China will be the most important economy this century.
Gold may drop as central banks and the International Monetary Fund (IMF) may sell the metal to raise cash, said Jim Rogers in New York.
The International Monetary Fund (IMF) in May ratified a plan that included proposals to sell 403.3 metric tons of gold to reduce a budget deficit. That Gold might be coming to the market depressing prices on the Gold Exchanges.
The IMF has gigantic amounts of gold,” said Rogers, a cofounder with George Soros of the Quantum Hedge Fund. “Maybe gold is going to go down for a while. If gold does go down, I’m going to buy more.”
The IMF’s gold-sale plan needs legislative approval from member countries including the US before it can be carried out. The lender is the third-largest holder of gold reserves, with a total of 3,217 metric tons valued at about $90 billion. The US has the most, followed by Germany.
The recent decline in raw-material prices is a short-term correction and doesn’t signal the end of the commodity bull market, Rogers said. The Reuters/Jefferies CRB index has plunged 44 percent from a record in July, including a 22 percent drop last month the biggest since 1956.
Supply constraints and inflationary pressures will boost agricultural, energy and metal prices, he said. “All the commodities are going to go higher,” Rogers said. “Everything’s been killed and they’re due for a rally.”
China’s emerging middle class make that country a better bet for stocks than the US and a driver of commodities demand, Rogers said later at the Inside Commodities conference in New York. Rogers, who has moved to Singapore, said he’s buying Chinese stocks and his young children are learning Mandarin because China will be the most important economy this century.
Video Interview: 3 rd November
Jim Rogers gave an interview to Bloomberg earlier today.
VIDEO INTERVIEW LINK
Jim is in New York to give a conference in the NYSE.
Interview at a glance:
Jim Rogers compares the US situation to the nineties in Japan. These plans will lead to inflation, higher interest rates and a declining dollar.
Two weeks ago Jim Rogers covered his shorts and is entering the market.
Jim Rogers recommends the closing of the Federal Reserve Bank.
He repeated the famous "Bernanke doesn`t understand economics, markets or currencies"
Two weeks ago Jim Rogers covered his shorts and is entering the market. Jim Rogers is buying into this, because is looking like a selling climax. Everybody knows there is a recession now, the stock markets were down 18% on a week, for Jim Rogers that`s a selling climax. He expects a big bounce, a big rally for the markets.
Rogers is buying oil today (that`s new), agriculture commodities and airlines (Iberia, Lufthansa, Austria Air, Singapore Air). Futures indicate higher prices ahead and this situation is a disaster for the oil supply. Oil reserves are declining 5 to 6% year on year. There is no way you won`t be making money in oil in the next few years.
Sugar is 80% below its all time high. Sugar is going through the roof in the next decade.
Gold might trade lower to 600 dollars, but he is buying anyway. IMF is going to sell a lot of gold and that might affect prices down the road.
We made a bottom in October, but might not be THE bottom. Problems may lay ahead in 2009 or 2010.
THis only happened 8 or 9 times during the past 150 years. Everything is being sold. THese are historic times, they will be discussed for years to come.
November 1, 2008
TIME Magazine Interview: 31 October
You were one of the first to call the commodities boom. Now that prices have fallen, has your bullishness changed?
No, no, not in the least. In the past 150 years or so, we've had eight or nine periods where there was forced liquidation of everything, with no regard to the fundamentals. Well, we're in one of those periods. In fact, what's happening now is improving the fundamentals of commodities. Farmers cannot even get loans for fertilizer. Certainly no one is going to get a loan to open a zinc mine. Supply is going down — this is very bullish. We have a decline in demand, but the world is in recession. We presume that is a business cycle.
So if I wanted to make money in oil, how long would my time horizon have to be?
I don't know whether you're going to have to wait six days, six months or six years before oil starts skyrocketing again. I covered a lot of my shorts [i.e., short positions] a couple of weeks ago and bought more commodities; I bought more agricultural commodities. I'm not a very good market timer, but I've been going back into the market. Ask me in a couple of years.
What other commodities have you been buying?
I only buy my indexes. I bought the agricultural index and I bought the general index. I think I'm going to make more money in agriculture than in other things for a while, but I'm not a very good market timer. I'm the world's worst trader.
You're the world's worst trader? You used to run a hedge fund.
Fine, but that doesn't mean I was a good trader. Whatever success I've had in investing has been by finding things that are cheap, buying them and owning them for years. I don't sit around trading. Brokers don't particularly like me.
You own the Swiss franc. With the bailout of Swiss investment bank UBS, how does that change your calculus?
The only thing the Swiss have had to sell for two hundred years has been the soundness of their currency. I, for the first time in my life, have started asking myself questions about the Swiss franc because of the UBS deal. It never occurred to me that the Swiss would do this [the bailout]. I have not started selling my Swiss francs. I have stopped buying them. I'm watching to see how it works out.
How worried are you about the slowdown in China's GDP growth?
I'm not worried at all. China could have a recession, it's not going to be the end of the story. In the 19th century, America had 15 depressions with a "d," a horrible civil war, we had very few human rights, we had no rule of law, we had regular massacres in the street. China will certainly have setbacks along the way. A lot of people think China can't have a recession. That's balderdash. China can have a recession like everybody else. Is it the end of the story? No. If it happens, you buy yourself some more China.
What were the things that made you start shorting financials a couple of years ago?
I could see that they were shams. There was no way Fannie Mae was producing 15% growth every quarter. They had giant derivatives positions, and they couldn't know what they were. I remember being on the telly, telling people that Fannie Mae was going to zero, and they'd say, What the hell are you talking about, that's Fannie Mae. Likewise with the investment banks. I used to sit there and say they're all going to eight [dollars per share]. It was clear that there were 29-year-olds on Wall Street sitting around making $10 million and thinking this was normal. I've been experienced enough to know that this is not reality. I'm still short the investment banks.
Can you quantify how much money you made from those positions?
That's a wonderful question, but you know I'm not going to answer it. I grew up in Demopolis, Alabama, where my parents and grandparents taught me you don't ever talk about how much money you have or how much things cost or how much you make. My grandparents would roll over in their poor graves if they heard me talking like that.
What do you make of the global financial crisis more broadly? Do you think there's still another shoe to drop?
Well, it's not over. It's going to be the worst economic time since the second World War, and that's because we had the worst excesses since the second World War. Certainly in the financial community what the governments are doing — they're making mistakes. In 1929 we had the stock market bubble pop, which was leading to a recession, but then the politicians all over the world made a lot of mistakes and turned what should have been a normal recession into a depression. I see the politicians making mistakes now, which may turn this into much much worse than it should be. The Federal Reserve and Treasury have more than doubled the American debt in the past three months. You and I are going to have to pay this off someday, and it's staggering.
You're not concerned about systemic risk? That if they hadn't taken the steps they did, things might be much worse?
When Lehman Brothers calls up [Treasury Secretary Hank] Paulson, what do you expect them to say? "Gosh, I got to worry about my Maserati or my plane payments?" No. They call up and shriek about systemic risk. Come on. Investment banks have been going bankrupt for hundreds of years and the world has still somehow survived. This approach has never worked. This is what the Japanese did in the 1990s. They refused to let anyone fail. And they had zombie banks and zombie companies. The way the system is supposed to work is when we have bad times, the assets moves from the incompetent to the competent, and then the competent start with renewed strength and the system rebuilds itself.
A lot of very sophisticated investors have lost a lot of money in this market. What is the ordinary investor supposed to do?
They should only be investing in things they themselves know a lot about. They shouldn't be listening to me or anybody else. If you know a lot about cars or fashion or something you should find great investments in that field. You're know a lot more about it than any Wall Streeter or hedge fund manager, because that's your passion.
So people should follow your advice about commodities only if they're farmers?
We all know about cotton. None of us had a clue what a dot-com was, but we all know what orange juice is. Before you go to work every morning, you use cotton and wool and silk and rubber and rice and wheat and corn and orange juice and coffee and sugar. Nobody can understand IBM. The chairman of the board of IBM can never understand IBM completely. It's got hundreds of thousands of employees. All you've got to do with cotton is figure out if there's too much or too little. That is not easy to do, but it is a lot simpler than understanding IBM or Toyota.
Are you riding a motorcycle much these days?
No, you break my heart. I haven't ridden a motorcycle in 10 years. If I had a bike now, I would take my little girls riding. But I've just been doing other things.
No, no, not in the least. In the past 150 years or so, we've had eight or nine periods where there was forced liquidation of everything, with no regard to the fundamentals. Well, we're in one of those periods. In fact, what's happening now is improving the fundamentals of commodities. Farmers cannot even get loans for fertilizer. Certainly no one is going to get a loan to open a zinc mine. Supply is going down — this is very bullish. We have a decline in demand, but the world is in recession. We presume that is a business cycle.
So if I wanted to make money in oil, how long would my time horizon have to be?
I don't know whether you're going to have to wait six days, six months or six years before oil starts skyrocketing again. I covered a lot of my shorts [i.e., short positions] a couple of weeks ago and bought more commodities; I bought more agricultural commodities. I'm not a very good market timer, but I've been going back into the market. Ask me in a couple of years.
What other commodities have you been buying?
I only buy my indexes. I bought the agricultural index and I bought the general index. I think I'm going to make more money in agriculture than in other things for a while, but I'm not a very good market timer. I'm the world's worst trader.
You're the world's worst trader? You used to run a hedge fund.
Fine, but that doesn't mean I was a good trader. Whatever success I've had in investing has been by finding things that are cheap, buying them and owning them for years. I don't sit around trading. Brokers don't particularly like me.
You own the Swiss franc. With the bailout of Swiss investment bank UBS, how does that change your calculus?
The only thing the Swiss have had to sell for two hundred years has been the soundness of their currency. I, for the first time in my life, have started asking myself questions about the Swiss franc because of the UBS deal. It never occurred to me that the Swiss would do this [the bailout]. I have not started selling my Swiss francs. I have stopped buying them. I'm watching to see how it works out.
How worried are you about the slowdown in China's GDP growth?
I'm not worried at all. China could have a recession, it's not going to be the end of the story. In the 19th century, America had 15 depressions with a "d," a horrible civil war, we had very few human rights, we had no rule of law, we had regular massacres in the street. China will certainly have setbacks along the way. A lot of people think China can't have a recession. That's balderdash. China can have a recession like everybody else. Is it the end of the story? No. If it happens, you buy yourself some more China.
What were the things that made you start shorting financials a couple of years ago?
I could see that they were shams. There was no way Fannie Mae was producing 15% growth every quarter. They had giant derivatives positions, and they couldn't know what they were. I remember being on the telly, telling people that Fannie Mae was going to zero, and they'd say, What the hell are you talking about, that's Fannie Mae. Likewise with the investment banks. I used to sit there and say they're all going to eight [dollars per share]. It was clear that there were 29-year-olds on Wall Street sitting around making $10 million and thinking this was normal. I've been experienced enough to know that this is not reality. I'm still short the investment banks.
Can you quantify how much money you made from those positions?
That's a wonderful question, but you know I'm not going to answer it. I grew up in Demopolis, Alabama, where my parents and grandparents taught me you don't ever talk about how much money you have or how much things cost or how much you make. My grandparents would roll over in their poor graves if they heard me talking like that.
What do you make of the global financial crisis more broadly? Do you think there's still another shoe to drop?
Well, it's not over. It's going to be the worst economic time since the second World War, and that's because we had the worst excesses since the second World War. Certainly in the financial community what the governments are doing — they're making mistakes. In 1929 we had the stock market bubble pop, which was leading to a recession, but then the politicians all over the world made a lot of mistakes and turned what should have been a normal recession into a depression. I see the politicians making mistakes now, which may turn this into much much worse than it should be. The Federal Reserve and Treasury have more than doubled the American debt in the past three months. You and I are going to have to pay this off someday, and it's staggering.
You're not concerned about systemic risk? That if they hadn't taken the steps they did, things might be much worse?
When Lehman Brothers calls up [Treasury Secretary Hank] Paulson, what do you expect them to say? "Gosh, I got to worry about my Maserati or my plane payments?" No. They call up and shriek about systemic risk. Come on. Investment banks have been going bankrupt for hundreds of years and the world has still somehow survived. This approach has never worked. This is what the Japanese did in the 1990s. They refused to let anyone fail. And they had zombie banks and zombie companies. The way the system is supposed to work is when we have bad times, the assets moves from the incompetent to the competent, and then the competent start with renewed strength and the system rebuilds itself.
A lot of very sophisticated investors have lost a lot of money in this market. What is the ordinary investor supposed to do?
They should only be investing in things they themselves know a lot about. They shouldn't be listening to me or anybody else. If you know a lot about cars or fashion or something you should find great investments in that field. You're know a lot more about it than any Wall Streeter or hedge fund manager, because that's your passion.
So people should follow your advice about commodities only if they're farmers?
We all know about cotton. None of us had a clue what a dot-com was, but we all know what orange juice is. Before you go to work every morning, you use cotton and wool and silk and rubber and rice and wheat and corn and orange juice and coffee and sugar. Nobody can understand IBM. The chairman of the board of IBM can never understand IBM completely. It's got hundreds of thousands of employees. All you've got to do with cotton is figure out if there's too much or too little. That is not easy to do, but it is a lot simpler than understanding IBM or Toyota.
Are you riding a motorcycle much these days?
No, you break my heart. I haven't ridden a motorcycle in 10 years. If I had a bike now, I would take my little girls riding. But I've just been doing other things.
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