Jim Rogers breaks down how unstable the markets have truly become. Could markets collapse by year end? Obviously this is unlikely, but what is true, is that any day a spark could be triggered, that leads to its downfall. - Video Source
Jim Rogers discusses the value of owning both Bitcoin and Gold in these unstable times. What is better, or are they equal in all qualities? Jim Rogers breaks these down and discusses in much greater detail.
Jim Rogers discussed the current state of gold and the markets that surround it. He states that everyone should have gold included in their portfolio, at least in some degree. Unfortunately, he doesn't like what he is seeing at this current time and is not adding to his position, yet. - Video Source
Legendary independent Investor, Jim Rogers, joins Steve Diggle, to talk about his career and how he sees the world now. Jim identifies the sectors and countries that he’s bullish on, with some incredible insight into how his life experiences have shaped his world view.
With sky high equity valuations, economic uncertainty, plus concerns over interest rates, central bank reactions and debt, the risks are rising. With a stellar cast, featuring some of the greatest investors on the planet, The Big Story - Edge of The Cliff, examines the potential for a major market correction and what that means for investors, in a world of complacency and compressed volatility. Filmed in September 2017.
Jim has been a long-time gold holder. And he believes everyone should hold gold – at least as an insurance policy.
“Everybody should have coins, physical coins, as an insurance policy, as an emergency, if nothing else. You hope you never need them. But you’ve got to start by owning gold coins, coins that are recognized all over the world.”
History has proven time and again that gold is one of the best ways to hedge your portfolio – that is, to protect it when stock markets everywhere fall. And, unlike paper money, gold is a permanent store of value. Gold has withstood history and maintained its inherent value. It’s durable, easy to transport, looks the same everywhere, and it’s easy to weigh and grade. In short, gold is insurance against financial calamity.
But what about investing in gold today? Jim says he’s not selling, but he’s not buying right now either.
“I’ve owned gold for many, many years. I’ve never sold any gold. I haven’t bought any serious gold since 2010. Before this is over, gold is going to turn into perhaps a bubble. It’s certainly going to get very, very, very overpriced. I’m not buying it now. But short of war, I expect another opportunity to buy gold and silver. And if it happens, I hope I’m smart enough to buy a lot.”
When the time comes, Jim believes gold coins are the best way to buy gold. But if you want to make big profits, look at gold futures and miners.
“You should have physical possession of some gold coins. After that, gold futures are the best way if you want to make money and you’re a good trader. Gold futures, that’s where you can get the most leverage, unless you can find the right gold mine. But there are hundreds of gold mines. So if you find the right gold mine, do it. But otherwise, have some gold coins in your closet or in your safety deposit box or both. And then learn about gold futures because that’s the way to make a lot.”
Like Jim, we’re fans of owning physical gold. But if you can stomach the volatility, my preferred way to invest in gold stocks is through a gold-mining ETF like the Sprott Gold Miners Fund.
As I told you earlier, it pays to listen to Jim. So I hope his latest ideas will serve you well.
Markets are more predictable than most people think. Stocks, sectors and markets rise and fall over time on repeat (as we’ve written before). For investors, it’s tempting to think that because a sector has been rising for some time… it will keep going up. Or that because another has been bearish for a while… that it won’t ever improve. This is called “status quo bias” – and it’s one of the most dangerous emotions in investing.
One sector that has been bearish for a long time is agriculture. It is down around 30 percent over the last two decades. But what goes up must come down (and vice-versa). Jim understands this, and that’s why he’s bullish on agriculture.
“Often throughout history if you find things that are disasters and you buy them, you may lose money first or you may go bankrupt first, but usually you make a lot of money in the end. It’s not the first time we’ve had big cycles in agriculture, in real assets, and probably not be the last time either.”
We’ve said something similar before: Often the best time to invest is when things are at their worst. That’s because shares are cheap when market confidence is low. And, since markets move in cycles, those cheap shares are bound to rise in value sooner or later.
If you want to follow Jim’s lead and buy into agriculture, he recommends the ELEMENTS Rogers International Commodity Agriculture ETN.
Millennials (or, for that matter, young people – regardless of the generation) often get a bad press. But, in a bull market, Jim Rogers believes that under-35s can make serious gains because of their fearlessness.
“When things are going right, we all need a 26-year-old. There’s nothing better than a 26-year-old in a great bull market, especially in a bubble, because they’re ’fearless‘. To youthful investors, a bull market will never end…”
Now, that’s great in a bull market. But in stormier weather when things are going south, Jim thinks that older (and perhaps wiser) heads should take the helm because fearlessness can be very dangerous in a bear market.
As Jim says, most of these under-35s don’t know why they made money in the first place. So they don’t know why they lose money.
“The most dangerous time is when you’ve had a great success because you really think you’re smart, and you’re immediately looking for what’s next. And that’s when you should close the windows and go to the beach or do anything to get away.”
In short, during uncertain times, sometimes the best thing to do is nothing. And part of doing nothing is holding what’s maybe one of the most-hated assets of all: Cash. It doesn’t earn anything, inflation eats away at it, central banks can’t stop printing it, and you’re denying yourself the magic of compounding if you’re holding cash.
But cash is the perfect hedge. You don’t have to worry about the market crashing if you have a lot of cash.
Now, we don’t recommend ever pulling out of the market completely, as we’ve written before. But if the market starts looking uncertain, think about raising a little cash.
Many investors believe that, with volatility at record lows and valuations at record highs, a major shock is imminent. However, these same investors have been burned by uncooperative markets, as an expected selloff has yet to materialize.
Rogers said he stumbled into his first job on Wall Street, but ended up falling in love with it because it allowed him to “follow the world and know about things.”
He added that, over his investing career, Roger's has learned that he has a tendency for his calls to be early. So now when he makes an investment decision, he waits six months before buying.
SD: How do you know the difference between being early and being wrong? Because -
JR: You teach me that, OK? I'd like to know. I'm still trying to learn.
SD: I really don't know, either. I mean, one of the things that has confounded, I think, all of us in this most recent unprecedented rally - I mean, it's not unprecedented in history, but the sort of things that have gone up and the level of volatility we've had that's been unprecedented. The only period that I can compare it to are the late 90s, where just everything in a certain area went up. Now it was almost-- at least in the States, it's almost everything across the board. And there have been plenty of people who've wanted to short the FANGs, to short some of the tech stocks, to short some of these very expensive blue chips. And they've been very badly punched.
And then even in the face of very good mutual fund investors, people with tremendous track records like Grantham Mayo, who have moved to a higher cash position - they've seen massive reductions, because their own investors don't seem inclined to stick around and see how it plays out. So both on a personal and professional level, being early seems to be incredibly painful and destructive to your business.
JR: Sure can.
SD: So if you've got a conviction, do you wait for a change in momentum? Do you use moving averages, which is something that I know people have been used, and I've used something myself, which is to wait until the 5 and 20-day diverge, and that gives you a signal that momentum's coming out of a trade? Or do you just need to size it to a degree which you can be persistent?
JR: Well, I usually - since I know I'm always early, I make a decision and then wait, and just make myself wait a month, six months, whatever it happens to be. And I'm still too early. I'm still too early nearly always, because I make the decision too soon, I realize. So maybe I better start making the decision later in life. Sometimes, you just have to throw in the towel. Especially on the short side, you have no choice. If they're just racing against you all the time, you can sit there and meet the margin calls all day long, but one of the old adages is, never beat a margin call, which you may have heard from old-time traders. If you've got a margin call, just don't meet it, because that means something is very seriously wrong.
SD: Right, that's your stop loss.
JR: Yeah, well, stop losses are usually before a margin call comes. But I want to go back to something you said. You're not as experienced as I am, obviously, because you're not as old as I am, is what I'm saying. But I remember in the early 70s, there was something called the Nifty 50, and they were 50 stocks that everybody - the JP Morgan bought everyday. Didn't matter. Avon, Xerox, IBM - they were stocks that always were eternal growth stocks.
And they just kept - we would short them, and they just kept going up. They never stopped. Polaroid-- that was another. And they just never stopped going up. Everything else stopped going up but those Nifty 50, which would be something like the FANGs today, or maybe in the late 90s, some of the other kinds of stocks. So this has happened before in market history. They eventually crack, there's no question.
And to today, if you look at the S&P 500, for instance, in the US, I think there are only 40 or 45 stocks that are above their 50-day moving average, to use technician's kind of talk. Everything else is in a downtrend. And yet the market is making all-time highs.
SD: And so there's a lack of breadth in the market.
JR: Definitely that lack of breadth. What is that - over 90% of the stocks are in downtrends. 10% are in uptrends, but they're big companies. And since the S&P is capitalization weighted, those 50 stocks, 40 stocks, whatever it is, dragged the average to all-time highs.
The biggest danger that our modern day, financial world faces at this time is the massive amount of derivatives that now exist. This has the ability to completely unravel our system as we know it, and Jim Rogers breaks down how to best prepare for it, if you can even do so.