Jim Rogers is an investing legend, a world record holder and a best-selling author. He co-founded the legendary Quantum Fund with George Soros, which generated returns of more than 4,200 percent over ten years. Jim retired at 37, and later drove around the world… twice.
He’s one of the founding fathers of the boots-on-the-ground approach to investing in emerging and frontier markets around the world.
I recently sat down with Jim – a fellow resident of Singapore – to talk about markets. Below is an extract of that conversation, about biggest threats investors should be worried about today… and how they should protect themselves.
Washington and the central bank
Kim: Jim, what do you view as the biggest threats to markets?
Jim: Washington, D.C. is the major threat to all of us because they want to do things like [start a] trade war. And they want to get in a war with somebody, whether it’s Iran, North Korea, whoever. But North Korea’s calmed down. Mr. Moon in South Korea has done a very good job. There’re lots of people that are bashing Russia. I have no idea why they’re bashing Russia. …
And the central bank in America, they’ve brought up gigantic debts on their balance sheet, they’ve push interest rates to the lowest in recorded history. Interest rates have never been this low anywhere in the world. With the result that debt has skyrocketed everywhere in the world. Interest rates are going to go higher again, they’ve already started.
So what I’m afraid is going to happen is as interest rates rise, you’re going to see problems in the markets. Everybody’s going to call the central bank and say, “Oh, you must rescue us.”
Now, the central bank is made of bureaucrats and academics, they don’t know what they’re doing. They will panic, they will try to rescue us. I don’t know what they’ll do, print more money, buy assets, whatever they’re going to do is not going to be the right thing. And so we’re going to have worse problems.
I hope I can survive the next bear market because it’s going to be horrendous and it’s going to be a big mess. It’s going to be the worst in my lifetime.
When I say that, some people say, “Well, you’re gloom and doom.” No, we’ve always had bear markets since the beginning of time. Janet Yellen, who was the head of the central bank in America until recently, said, “No, we’re not going to have bear markets ever again. We solved the problem.”
She said we’re not going to have bear market. I know we are. 2008 we had a bear market, it was horrible because of too much debt.
Well, Kim, debt all over the world is much, much, much higher now. People have talked about austerity, nobody’s practicing austerity. It’s going to be a horrible nightmare. And I hope I survive it, I hope we all survive. But I know just having read enough history that a lot of people are not going to survive it.
