The rise of bitcoin has been one of the biggest stories in financial markets this year. Up 150% year-to-date, the sudden surge in prices for bitcoin has surprised even its most ardent proponents, while catapulting digital currencies into mainstream consciousness for the first time.
Bitcoin's rapid ascent has brought with it a spectrum of opinions about whether this asset is the real deal. Is bitcoin here to stay, or is it a bubble ready to burst? To answer that question, ETF.com asked three investing legends for their take on this controversial topic.
Jim Rogers is a famous author, investor and businessman. He's well-known for co-founding the Quantum Fund and creating the Rogers International Commodity Index.
Kevin O'Leary is an entrepreneur who sold his software company for more than $4 billion. Today he's known as Mr. Wonderful on the hit TV show "Shark Tank" and as chairman of O'Shares Investments.
Dennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets that's been popular with traders and investors for more than 20 years.
Jim Rogers
I'm not an expert on the subject, but I know there are several cybercurrenciesdeveloping. I do know the world has a big money problem facing us. I do know that in the past few decades, nearly everything we know has been changed and problems are being solved by the internet―and money will be, too.
Our new system of money, whatever it is, is going to be something on the internet. Whether it’s bitcoin or not, I don't know. I’m not smart enough or knowledgeable enough to know.
I do know that, for instance, IBM did not invent the computer. But the people who did invent it, you haven’t heard of. So who knows who will wind up being on top with cybercurrencies?
Kevin O' Leary
My concern about cryptocurrencies is the fact that they can be used in an unregulated format. The speculation is that a lot of the ransomware episodes were driven by the availability of these currencies.
That's always going to keep them out of the mainstream and hold them back. For example, the attempt to create an ETF around bitcoin failed because the regulators didn't see it as something they thought had the merit to be invested institutionally.
It's also extremely hard to short bitcoin. Therefore, how do I know there's been a full price discovery on its value if nobody can take the other side of the trade?
I would prefer, at the very least, that there be an instrument by which I could short bitcoin, because I think you'd find a lot of people would like to be on the other side of the trade. Once all that price discovery came into it, along with more liquidity, it would be safer.
I look at it as another currency—and I do own multiple currencies in my portfolio—but I've always refused to take on the volatility of a bitcoin because I don't know if it's really got true price discovery.
Dennis Gartman
I love to talk about bitcoin. The only people who believe in it are the millennials. I understand that; they've grown up with this notion of bitcoin. But I find bitcoin to be one of the most ludicrous ideas I’ve ever come across.
Don't get me wrong; the idea behind it―the blockchain technology behind it―is bloody brilliant. The block chain methodology will change the manner in which we trade stocks, bonds, currencies and gold for years into the future. It will change the manner in which trading takes place.
But does bitcoin have any rationality behind it whatsoever? The answer, in my opinion, is no. It’s comically overpriced, comically close to a bubble, and we've seen bitcoin's high. I don't think there's any question that a month and a half ago we saw the high made in bitcoin.
What's amusing to me is that the believers in bitcoin say there's a fixed and finite supply that cannot be increased. Sure, maybe bitcoin supply can't be increased, but there are now over 100 other cryptocurrencies, which effectively increases the supply of cryptocurrencies.
And quite honestly, if you really think that bitcoin, once its last bit has been mined, is not going to reopen for further increases in supply, you're naïve; of course it will.
So has bitcoin supplanted gold at the margin? No question. For the millennials, bitcoin makes sense to them. Gold seems senseless; they don't get it. But the bubble has burst in the bitcoin phenomenon.
The Kremlin as a whole has changed, notes Rogers. Specifically, the nation's treatment of its citizens.
"Something happened in the Kremlin, which means something happened to Mr. Putin," explained Rogers. "They used to just shoot you or take your money, or put you in jail – but they don't do that anymore – for most people."
Moreover, "they've changed their attitude and realized they have to play by the international rules that everybody else does," said Rogers. "They're trying to attract capital, investment, and brains!"
A key strategy of Rogers' is to invest where everyone else isn't. "When everyone is on one side of the boat, you want to go to the other," Rogers told Keith many years ago.
And that's precisely why he's bullish on Russia today. "Russia is maybe not the most hated market in the world, but it is certainly one of [the most hated]," said Rogers. "Nobody likes Russia except for Russia."
Keith agreed that Russia could be a great investment opportunity right now. In fact, Keith has been recommending investors pivot towards Russia since 2015.
"99% of all investors are missing out and would never invest in Russia right now," said Keith. "Instead, they'll sit back and wait for things to 'get back to normal' before making their move."
"As usual, they'll miss the truly extraordinary profits."
The question investors should be asking themselves right now is not whether or not to invest in Russia, according to Keith, but rather, how you will feel in the future knowing that you've been left behind.
As part of that, Keith prioritizes what he calls "Unstoppable Trends" in the market to keep investors ahead of the curve. These trends will continue to make you money no matter how aggressively Putin is treating his citizens or whether or not he is playing by international rules.
"These trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack," says Keith.
At FreedomFest, commodity guru Jim Rogers warned that the U.S. economy’s historic pattern of enduring a downturn every four to eight years indicates people should prepare for such a prospect to occur in the next 2-3 years. Worse, because today’s debt load is larger than in 2008, we could be in an even more severe problem the next time the economy falters.
“If you’re not worried, you are not knowledgeable,” Rogers said.
I chaired a session with Rob Arnott, who the Wall Street Journal labeled the “godfather of smart beta,” on the topic, “My Favorite Money-Making Strategy, and Investments to Avoid.” He warned against load funds, annuities, hedge funds and private equity, but liked my strategy of investing in quality companies that pay high and growing dividends. He and Cliff Asness wrote an academic paper entitled, “Surprise! Higher Dividends = Higher Earnings Growth.”
Arnott agreed with Rogers that the stock market is no bargain. In fact, we are within a year of enjoying a record — the longest bull market in history!
As the market crawls higher, some might be tempted to make fun of the Bears for continuing to bet against the stock market. For men like Jim Rogers though, it only adds more seriousness to their warning of a coming downturn.
Meanwhile, higher markets mean higher profits for those who are invested, and subscribers of my Forecasts & Strategies newsletter have taken full advantage of the opportunity by being fully invested all year.
In an exclusive interview with Birch Gold Group, Jim Rogers makes some alarming statements about the state of the U.S. economy, predicting that the next crisis will be fully apparent within the next two years. He takes specific aim at Janet Yellen and the Federal Reserve, saying of record-low interest rates, "It's all absurd what's been happening!"
Welcome to legendary investor, Jim Rogers. For those who don’t know him, Rogers has an un-refuted passion for investing and renown for his ability to make money. Lots of it! Having worked alongside names like George Soros and made returns like…an eye-watering 4200% over ten years (compared to the S&Ps 47%!), he’s done pretty well! In fact, he’s even founded his own Index – The Rogers International Community Index. But it doesn’t end there!
Zack Bogue, Data Collective co-managing partner, discusses opportunities in artificial intelligence with Bloomberg's Emily Chang on "Bloomberg Technology."
Is it time for the market to crash? Legendary investor Jim Rogers joins Kitco News for an interview to discuss his predictions for the biggest financial crisis we’ll see in our lifetimes, and how he’ll be protecting himself. “Gold is going to be explosive in the next few years,” Rogers said, as he gave his insight on gold, the U.S. dollar, and the crypto-craze. You can catch Jim Rogers at Freedom Fest this August in Las Vegas.
An imminent economic crisis the likes of which this generation has never experienced is coming. However, the conditions under which the next bubble will burst will surprise even the most astute observers of economy, culture, and politics. The higher education bubble (one-sixth of the U.S. economy) will likely burst with the force of all previous catastrophes combined—a shock wave so sudden, so large, that it gathers the full force of the savings and loan, insurance, energy, tech, and mortgage crashes, creating a blockbuster-level perfect storm.
Disturbing patterns of unsustainable economic activity have emerged over the last decade. College and university budgets rely on inflated real estate investment, deny the short- and long-term effects of student loan defaults, accept the rise in tuition above the rate of inflation as normal, and expect a downsized part-time faculty to help subsidize inflated tenure track and endowed tenure budgetary lines. The insatiable upper administrative appetite for high salaries, job description absurdity, and low accountability adds endless layers of compulsive, prideful incompetence to an already unstable education business model that believes it simply cannot crash.
While higher education is not a business in the same way for-profit corporations are, a business plan rooted in reality remains essential to its success. Reality, however, seems an ongoing elusive concept to college administrators. Dormitories and sports facilities are funded regardless of flat enrollment rates. The mission of imparting knowledge to students (the service for which parents and students pay dearly) is shunted off to ill-paid adjunct faculty with no skin in the game. Students poorly equipped for real-world opportunities are unable to repay student loans, let alone become alumni willing and able to support their alma mater. How long until higher education’s customer base realizes the expense is no longer worth it?
Without dramatic and immediate changes in the higher education sector, broader economies that support third-tier learning will fail along with it: People in the community employed by the college will lose their jobs; commercial activity geared toward the student population will fail; and investment in real estate for student housing will no longer have its expected return.
We call for a return to the teaching and innovation mission of the American university. We need a well-educated, resilient, adaptable, and entrepreneurial graduate to meet the needs of a new “gig” economy, which includes coding, plumbing, elder care, sociology, food service, and hotel management. We demand higher educators meet the market and personal demands of the new student body.
And while the teaching model will necessarily be heavily invested in digital knowledge, we must look to a very old style of teaching. The system of tenured professors more interested in research than in imparting knowledge, buttressed by overworked and precariously employed adjunct faculty, does nothing to stabilize a higher education community. An apprentice/mentor system grounded in a proficiency model charged with technical, academic, and professional skill development and critical thinking objectives will revolutionize higher education.
We want our colleagues to focus on imparting the empathy that comes from interaction with other people, cultures, works of literature, and art, as well as the concrete and necessary skills for success in the post-college world of production, innovation, and hands-on work. We can deliver this high level of education while modeling what it means to have a true plan for paying for what is necessary. What better lesson could the American college graduate take with them into the working world?
