JIM ROGERS: The World’s Savers Are Being Wiped Out

English: American investor Jim Rogers in Madri...

English: American investor Jim Rogers in Madrid (Spain) during an interview. Español: El inversor norteamericano Jim Rogers en Madrid (España) durante una entrevista. (Photo credit: Wikipedia)

Jim Rogers decries the growing uncertainty and recklessness of global central planners as the world enters uncharted financial markets:

 

For the first time in recorded history, we have nearly every central bank printing money and trying to debase their currency. This has never happened before. How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns. When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.

I own the dollar, not because I have any confidence in the dollar and not because it’s sound – it’s a terribly flawed currency – but I expect more currency

turmoil, more financial turmoil. During periods like that, people, for whatever reason, flee to the U.S. dollar as a safe haven. It is not a safe haven, but it is perceived that way by some people. That’s why the dollar is going up. That’s why I own it. Will I own it in five years, ten years? I don’t know.

It makes it extremely difficult for the investor looking for acceptable risk/reward, or the saver looking to protect their purchasing power; as in Rogers’ view, all options have their problems:

I own gold and silver and precious metals. I own all commodities, which is a better way to play as they debase currencies. I own more agriculture than just about anything else in real assets because of the reasons we discussed before. We were talking before about the risk-free or worry-free investment. Even gold: the Indian politicians are talking about coming down hard on gold, and India is the largest buyer of gold in the world. If Indian politicians do something — whether it’s foolish or not is irrelevant — if they do something, gold could go down a lot. So I own it. I’m not selling it. But everything has problems.

To Rogers, the bigger danger that concerns him is the hollowing out of the ‘saving class’ resulting from this situation. Central planners’ policies are punishing the prudent in favor of rescuing the irresponsible. This has happened before in world history, and the aftermath has always had grievous economic, social — and often human — costs:

Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.

In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.

If you go back in history, you’ll see what happened to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.

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Jim Rogers Forecasts ” Lost Decades for the U.S.”

English: American investor Jim Rogers in Madri...

English: American investor Jim Rogers in Madrid (Spain) during an interview. Español: El inversor norteamericano Jim Rogers en Madrid (España) durante una entrevista. (Photo credit: Wikipedia)

 OCTOBER 15, 2012 BY 

The period between 2000 and 2009 is often referred to as the “Lost Decade” for U.S. investing, as markets were barely able to scrape up any gains over the ten year stretch. But as we have moved on, and markets have recovered from the recession, the fear of a further and possibly deeper recession still persists. Some point to Bernanke and the Fed’s open-ended easing as our undoing, while other feel that our ever accumulating debts will eventually shock markets. Expert analysts and investors around the world have been quick to give their two cents,  and perhaps none have been more vocal or negative than Jim Rogers [for more economic news and analysis " FOLLOW" our free newsletter].

The legendary commodity investor has been down on the U.S. economy for quite some time as he feels that 2013 and 2014 will see markets slip into a deep recession. Now, Mr. Rogers has taken his claims a step further by claiming that the “Lost Decade” was not a one time anomaly for America. Rogers feels that we will suffer several lost decades, as he drew the comparison between our economy and that of Japan; one that has been well documented for years and years of poor market performance and a sputtering economy.

“The idea that you prop up people who are bankrupt is what Japan did. Japan had two lost decades, America will have a few lost decades” said Rogers. That kind of bearishness from a world-renown expert has some investors worrying, as if they weren’t already on the edge of their seats. Luckily, Rogers has been very vocal about which investments he sees performing well in the coming years, allowing those who follow his claims to protect themselves from the possibility of another lost decade [see also Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later].

Agriculture and farmland are by far Mr. Rogers’ favorite investments, and have been for some time. Investors can use the DB Agriculture Fund (DBA) and the Market Vectors-Agribusiness ETF (MOO) for exposure to agricultural futures and producers respectively. Rogers has also stated that he likes both gold and silver, but for the time being he favors silver over its precious metal counterpart. Investors can play the iShares Silver Trust (SLV) and the SPDR Gold Trust (GLD) to follow both of these ideas. Although, if we are truly headed for another few lost decades, placing money in the markets may be something you will avoid as an investor, especially with the unpredictable nature of today’s economy.

The Prophets Of Doom – Words of Wisdom from Jim Rogers and Marc Faber

” Doom ” is the headline in this Wealth Wire essay – but is really is a summary of plain, good old fashioned wisdom

Jim Rogers

“Bottoms in the investment world don’t end with four-year lows; they end with 10- or 15-year lows.”

jim rogers hand

Rogers is an American investor and author, currently based in Singapore. He may be most notable for co-founding the wildly successful Quantum Fund with George Soros. He also founded the Rogers International Commodities Index (RICI) and chairs Rogers Holdings and Beeland Interests, Inc.   

He famously broke a Guinness World Record by driving his motorcycle across the globe, checking out far-flung economies like China, Uruguay, and Mongolia.

These travels have made him very bullish on the long term economic prospects of China and Asia. As central banks around the world try to print their way out of the holes they’ve dug, the value of their currencies will be damaged by inflation. That should boost the prices of real assets — and Rogers is “generally short global equities and owns real assets and producing agricultural land.”

“I’m now selling long-term U.S. government bonds short. That’s the last bubble I can find in the U.S.,” he told CNN.

“I cannot imagine why anybody would give money to the U.S. government for 30 years for less than a 4% yield. I certainly wouldn’t. There are going to be gigantic amounts of bonds coming to the market, and inflation will be coming back.”

Rules to Invest By:
1. Do your own work. Don’t be afraid of being a loner. 

I learned early in my career that if you read the annual reports, you’ve done more than 90% of the people on Wall Street. If you read the notes to the annual report, you’ve done more than 95% of the people on Wall Street, and if you actually sit down and do a spread sheet, you’ve done more than 98% of the people on Wall Street.” 

2. Good investors need a historical perspective

3. Think conceptually about the world.

4. Don’t buy stocks at high multiples. 

“I don’t buy them because, by the time they reach a high multiple, it’s probably about time for it to come to an end. Wall Street and politicians are the last to catch on to any­thing.”

5. Be selective in your investing and look for one good idea. 

“The most important trick for getting rich on Wall Street is not to lose money. There are many guys who do well for two years and then get creamed. Wait until you have a winner and are sure. In the meantime, keep your money in treasury bills. Professional money managers feel that they have to do something all the time and are the worst at following this advice.” 

“Even if you only have one play every ten years, you’re going to do a lot better than most people.” 

6. Every investment should be considered a commodity that will be affected by supply and demand changes. It’s just a question of when. 

“Everything has its own supply and demand cycle, which may be a twenty-, thirty-, or fifty-year cycle, and every­thing is basically a commodity in the end.”

7. Every investor should lose some money, because it teaches you about yourself.

Marc Faber

“What I object to the current government intervention in so-called ‘solving the crisis,’ they haven’t solved anything. They’ve just postponed it.”

The original “Dr. Doom,” Faber has been at the forefront of the Austrian economic school. Faber’s Doom, Gloom and Boom report has been the bible for millions of contrarian investors worldwide.

As the London Times wrote: “One does not go to see Marc Faber, Hong Kong’s iconoclastic share pundit, in the expectation of good news. But after listening to him, no investor could claim he had not been warned. For Faber says the things nobody wants to hear…”

Nobody but his clients, that is…

In 1987 he warned his clients to cash out before Black Monday in Wall Street; he made them handsome profits by calling the burst in the Japanese bubble in 1990.

He also predicted the collapse of U.S. gaming stoc

ks in 1993 and the Asia-Pacific financial crisis of 1997.

Faber

Rules to Invest By:
(from Gloom, Boom and Doom)

1. There is no investment rule that always works.

“If there was one single rule that always worked, everybody would in time follow it, and therefore, everybody would be rich.

But the only constant in history is the shape of the wealth pyramid, with few rich people at the top and many poor at the bottom. Thus, even the best rules do change from time to time.”

2. Stocks always go up in the long term?

“This is a myth. Far more companies have failed than succeeded. Far more countries’ stock markets went to zero than markets, which have survived…

Just think of Russia in 1918, all the Eastern European stock markets after 1945, Shanghai after 1949, and Egypt in 1954.”

3. Real estate always goes up in the long term?

“While it is true that real estate has a tendency to appreciate in the long run, partly because of population growth, there is a problem with ownership and property rights. Real estate in London was a good investment over the last 1,000 years, but not for America’s Red Indians, Mexico’s Aztecs, Peru’s Incas, and people living in countries that became communists in the 20th century. All these people lost their real estate and usually their lives along with it.”

4. Buy low and sell high.

“The problem with this rule is that we never know exactly what is low and what is high. Frequently what is low will go even lower, and what is high will continue to rise.”

5. Buy a basket of high quality stocks and hold!

“Another highly-dangerous rule! Today’s leaders may not be tomorrow’s leaders. Don’t forget that Xer

x, Polaroid, Memorex, Digital Equipment, Burroughs, and Control Data were the leaders in 1973… Where are they today? Either out of business — or their stocks are far lower than they were in 1973!”

6. Buy when there is blood on the street.

“It is true that very often, bad news provide an interesting entry point — at least as a trading opportunity — into a market. However, a better long-term strategy may be to buy on bad news that has been preceded by a long string of bad news. When then the market no longer declines, there is a chance that the very worst has been fully discounted.”

7. Don’t trust anyone!

“Everybody is out to sell you something. Corporate executives either lie knowingly — or because they don’t know the true state of their business and the entire investment community makes money on you buying or selling something.”

8. The best investments are frequently the ones you did not make!

“To make a really good investment (which will in time appreciate by 100 times or more) is like finding a needle in a haystack. Most “hot tips” and “must-buy” or “great opportunities” turn out to be disasters.

Thus, only make investment decisions you have carefully analyzed and thought about in terms of risk and potential reward.”

“If you live in a small town you may know the local real estate market, but little about Cisco, Yahoo and Oracle. Stick with your investments in assets about which you may have a knowledge edge.”

10. Invest in Yourself!

“Today’s society is obsessed with money. But the best investments for you may be in your own education, in the quality of the time you spend with the ones you love, on your own job, and on books, which will open new ideas to you and let you see things from many different perspectives.”

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Jim Rogers reveals the next great commodity investment‏

English: Deere & Company World Headquarters bu...

English: Deere & Company World Headquarters building in Moline, Illinois, USA (Photo credit: Wikipedia)

During a recent interview with Investment U, Jim Rogers revealed his favorite place to invest now.

It’s not gold. It’s not technology.

It’s not copper, or oil… or emerging-market stocks.

It’s dirt. More specifically, Rogers likes agriculture.

The sector’s performance is starting to back him up, too.

During one recent 12-month span, the bellwether DB Agriculture Fund (NYSE: DBA) soared 26.4%, outpacing the S&P 500 by 63%.

When the debt downgrade hit U.S. Treasuries in August 2011, DBA dropped 4.42% while the broad market tumbled 16.67%.

Agriculture, right now, is proving more profitable – and safer – than the broad stock market.

Take a look:

 

DB Agriculture Powershares Chart
Rogers sees the trend continuing for the foreseeable future.

If his latest analysis of the global economy is accurate, “everybody who has a second home in Iowa would be rich,” says Rogers.

Rogers has long been known as the world’s leading commodity investor. (His track record, as you may know, includes co-founding the Quantum Fund, which soared 4,200% in 10 years versus 50% for the S&P. He’s also penned numerous bestsellers, which should be required reading for any serious investor.) And earlier this year he restated his belief that all commodities are in a bull market that has years to run.

But he singled out agriculture as the best sector right now.

Rogers’ Rationale: Why Agriculture Could Soar

This is a man known for doing his homework. And that’s what has led him to this conclusion.

For starters, agriculture has been a backwater sector for decades. That has created value.

“Over the last 25 or 30 years, agriculture’s been a horrible way to make money throughout the world. As a result, we have virtually no farmers,” Rogers pointed out in a recent interview withInvestment U Executive Editor Garrett Baldwin.

“According to the U.S. Government, the average age of farmers in America is 58 years old. In 10 years, they’re going to be 68 years old… if they’re still alive.

The shortage of farmers will lead to a shortage of farm production. And these shortages equal opportunity with commodities.

“If you get out the Department of Education’s numbers for the past 50 years,” says Rogers, “You’ll see a dramatic decline in the number of students studying agriculture, mining and petroleum engineering.”

“We don’t have any new farmers,” Rogers says. “Second of all, the [experts] are pretty old and are going to be going out of business. It’s a huge mess we have that’s developing in the world, and you’re going to see more and more shortages develop.

“We already have very low inventories on a historic basis for agricultural products. And even if we have a great local crop this year or next, so what? It’s going to be consumed very quickly because the inventory levels are already so low.”

In the future, Rogers sees farmers driving Porsches… and Wall Street brokers driving junkers.

He’s very serious about this.

“You know, the stock brokers are going to be broke,” says Rogers, foreshadowing what he sees as an increasingly diminished role for the financial sector. “All the farmers are going to be stunningly rich.”

How to Invest in the Coming Agriculture Boom

The bottom line for investors, Rogers says, is to participate in the coming agriculture boom however you can. That can include investments like stocks, of course.

But for those with flexibility, he suggests more creative ways to build wealth.

“You want to buy a lake house, buy it in Iowa or Oklahoma. Don’t buy it in Massachusetts,” he says.

Rogers continues: “Buy where the people are going to be rich. Open yourself a chain of restaurants in the agriculture area or department stores or hotels. Anything that you want to do in an area where people are making lots of money, you’ll make a lot of money, too… just because they’re rich.”

On a more conventional-investing level, Rogers sees plenty of opportunity, as well. “Certainly, the seed manufacturers and tractor manufacturers, backhoe dealers, everybody who has anything to do with production of raw materials is going to get rich.”

Some ways to invest include…

Equipment:

Deere & Company (NYSE: DE): The maker of John Deere tractors and equipment is the blue chip of the sector.

AGCO (NYSE: AGCO): Another farm-equipment manufacturing powerhouse, but on a smaller scale… AGCO could have plenty of room for growth, holding a large chunk of Brazil’s tractor market.

CNH Global (NYSE: CNH): The second-largest maker of farm equipment on earth, but less than half of Deere’s market cap.

Seeds and Fertilizers:

Potash Corp. (NYSE: POT): Like Deere, a stalwart of the sector, selling fertilizer and seed products across the U.S. and Canada.

Monsanto (NYSE: MON): Produces seeds for global markets, along with proprietary genetics and other products.

Syngenta AG (NYSE: SYT): This seed giant puts the focus on hybrid and synthetic seed technologies.

Timber:

Plum Creek Timber (NYSE: PCL): This real estate investment trust owns timberland across the U.S. and pays a very healthy dividend.

Weyerhaeuser Company (NYSE: WY): For over 110 years, Weyerhaeuser has set the standard for the timber industry.

ETFs

PowerShares DB Agriculture ETF (NYSE: DBA): Tracks the Deutsche-Bank Agriculture Index and is one of the oldest agriculture ETFs in the world.

Market Vectors Agribusiness ETF (NYSE: MOO): MOO contains a basket of stocks tracking the DAXglobal Agribusiness Index.

IQ Global Agribusiness Small Cap (NYSE: CROP): A more aggressive fund that tracks the index by the same name. Holdings include Tractor Supply, Viterra and Nufarm Limited, Australia.

But perhaps the single best investment for average investors would be Rogers’ own fund:ELEMENTS Rogers International Commodity Agriculture ETN (NYSE: RJA).

This ETN tracks Rogers’ own index by the same name. The fund has been outpacing DBA in recent years.

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