There’s simply too much money injected into the monetary system by central banks to allow a sizeable bear market to take place soon, said Jim Rogers, investor and chairman of Rogers Holdings. “Many stocks in the U.S. are down in 2020. There are a few stocks that are going through the roof every day. Some parts of the U.S. market are developing a beginning of a bubble, but many parts of the markets are not, that’s why I suspect [this rally] is going to go on for a while,” Rogers said.
Renowned investor and author. Jim Rogers is back to give us an economic outlook and talk about the markets and how you should be investing right now. Jim, it's good to see you again. Welcome back. I'm delighted to be here, David. Thank you, Jim. Let's start with your macro economic outlook as usual. You have, uh, your finger on the pulse on what's going on in the world.
Tell us how you're reading the markets today. You mean the U S we can mind the U S are we talking about, I mean, the lesson, not to cause a big world out there. David, what are you talking about? How about China? How much Japan let's do. Let's start with the U S and, uh, we'll talk about, uh, domestic markets first in the U S.
Okay. Well, as, as you know, um, the United States central bank has been printing gigantic amounts of money. And the central bank central government has been spending huge amounts of money. So all of this money has got to go somewhere. It's going into the markets. The economies are getting better because that condom has stopped.
And I live in Singapore for instance. Well, the airport was empty now. There are a few flights a day, so things are getting better. But they're still not anywhere near what they were before and that's happening all over the world because we're going from zero to, I don't know how far we're going. No know.
So for awhile, while economy in the us is going to get better and certainly the markets, as long as they print all this money now, November, the markets were very strong. Maybe we'll have a pullback, but if so, you know, then Washington is going to panic and do everything they can to get the markets up again.
But that's true in several other countries around the world. Do you think that, uh, valuations for the stock markets for, uh, domestic markets are fair right now? You talked about a possible pullback, the Dow at over 30,000 points. Could it keep going higher from here? Could it, well, anything can happen and probably will while they're printing all this money.
But a day when many stocks in the U S are down in 2020, there are a few stocks that are going through the roof every day. I mean, some parts of the U S market are developing a market beginning of a bubble. Uh, but many parts of the market are not. That's why I would suspect this is going to go on for a while because it's not a full fledged bubble yet.
It is. And it's beginning to be in some stocks and in other countries as well, China, Japan, you know, but in the U S and I don't know anywhere where there's a full fledge. Bubble yet in any stock market around it, the bond market is a bubble bond market all over the world is a bubble, but I don't know any stock market.
That's a full fledged bubble. Yeah. Particular markets around the world that you would prefer. If you looked at emerging markets, for example, versus domestic markets, how would you rate those securities around the world? Oh, I buy Japanese. These ETFs I had, they had the Japanese market is down 30% from its all time high.
And the bank of Japan buys, ETFs prints, huge amounts of money in bonds ETFs every day, David, he has more money than I do. She's going to buy ETFs. So am I, and the market's down, likewise in China, the Chinese market is down 30 or 40% from its all time high, you know, and they've done a less bad job of dealing with all of this.
So China, Japan, Russia, Russia's hated. Uh, there are markets that are still down and I would prefer to buy those, but you know, they're also, I mean, commodities. Commodities, maybe the cheapest asset class around right now. If you looked at a development since last time, we've spoken to summertime. One of the major developments is a vaccine for COVID-19.
That is in the works of being rolled out. Several companies have already developed vaccines. The markets have ingested this as good news for the most part, but some economists are still skeptical. As to how effective this vaccine could be in the initial phases of the first couple quarters, for example, of 2021.
Do you think that this news, the vaccine news would have any significant impact on, on domestic markets in particular? Already has, I mean, I'm not the only one who knows that there's other vaccines being rolled out. Uh, it certainly will take a while to vaccinate people. Uh, you know, there are 6 billion people in the world, so it's going to take a long time to vaccinate everybody.
So, yes, it's good news. Yes. It's happening. Yes. It will make things better, but yes, it will take time. Yeah. Offline. You're telling me that you are very positive on the equities markets for the most part, for the short term. Uh, eventually, should we have another correction? It would be the worst in our lifetime.
Can you elaborate on, uh, how that process would take place? Well, what I said was we've had bear markets periodically for thousands of years, hundreds of years, we will have them again. In 2008, we had a bear market because of too much depth, but David says 2008 debt everywhere in the world has skyrocketed staggering amounts.
So, what I said was the next time we have a bear market and I don't know what it's going to be. Watch Kitco news. They'll tell you when it's coming, but when it comes, it's going to be the worst in my lifetime has to be because the debt is so, so I mean, maybe I'm wrong. I'm wrong. You tell me why with the debt is so much, much, much higher all over the world now than in 2008.
What's the relationship between debt and market performance. Jim, can you break that down for us? Well, when markets start going down for when bear markets start, for whatever reason, uh, people are very skeptical of companies that have a lot of debt because that's fear. And as exuberance gives way to fear people start worrying about, will they survive or can they survive?
Or their earnings must go down because they have so much debt and some companies start going bankrupt, really bad ones. And that, and it spreads. I mean, this is just a simple bear market down. I'm making this up. It's happened hundreds of times in bear markets all over the world, uh, throughout history. And that's the way they work.
So Jim, how should investors prepare for such a market correction? It's not determined when it could happen or even the magnitude of such a crash. But we should still be prepared. How should we be allocating our assets and preparation? Well, everybody should all allocate their assets in what they themselves know.
They shouldn't be listening to me or anybody else should only invest in what they know. I may have 100% invested in Russia. But if they can't even find Russia on a map, they shouldn't think about investing in Russia. Uh, I may have a lot of money in commodities, but if they don't know what commodities are, everybody should invest in what they know.
Should not listen to others and then they will know how to get through any problems that develop. You told me last time we spoke that, uh, it's important for an investor to pick out things that are hated and or cheap. Are there any such assets around the world today that might fit that criteria? Well, Russia still, uh, about Chinese wine companies recently, you know, the virus calls bars to close restaurants are close.
People stopped going out that starting to change. I can see it on the internet. China's open. Uh, I told you about Japanese ETFs, Japanese market's down over 30% from its all time high us is making all time highs. So there are certainly still places. That may be their opportunities. Do, do you like the technology sector in the U S right now?
Uh, it's been a driving force of the equities markets. The last year. Most of this tech stocks have done very well except for the last month or so. Do I like it. I mean, I'm not going to buy those things. Are you kidding? I mean, Apple, not just the first one to know about Apple, you know, apparently every, uh, every item you invested in, in the U S right now is buying Apple in China.
They're buying 10 cent by all of these stocks, then you investors, it's not for me. I mean, it may double again. But not for me. I prefer to buy things that are cheap and hated something that's not being looked at. So Apple, for example, is everybody, everybody analyze it. That stock there's there's as an investor, it's difficult to find a value in, in something that's looked at by everybody is what you're saying.
I don't want to just looked at owned by everybody, by everybody. Yeah. How many of you own it? And don't even know what it is, but it doesn't matter. They're making money. So they're happy, but that's not for me. I mean, I'd rather not. I bought a Russian shipping company recently. Oh my God, you turn about hate it.
It's hated. Russia's hated that companies hated their opportunities. What things are hated and nobody knows about yet. Now I, I think, uh, correct me if I'm wrong, but I would attribute your style to value investing. You're you're you the legendary for, for how you've invested and, uh, many might consider you one of the better value investors of our day.
Can you walk us through the process of, uh, Identifying a security that you think is undervalued. You already mentioned some of the things already. Oh, cheap, hated low debt. I mentioned Chinese Weinstock's I suspect that very few people watching this show know there are Chinese. Weinstock's much less that they might go up.
And I tell you that the virus has closed restaurants and bars and everything else. So conceivably, these stocks will go up again. When people started going out, uh, as far as I can tell, they have good products, Eastern management, et cetera. Uh, but David, I don't just invest in stocks. I want, I, I short, I'm not sure in bonds right now in commodities, currencies, or lots of other opportunity as I look around the world, bonds are a bubble.
Many stocks are making all time highs property in many countries is a certainty and of bubble cheapest asset class. I know commodities now. I mean, sugar's down 80%. Silver's down 50% from its all time high. These are the con, this is not a bubble. Is I look at asset classes. At the moment, commodities seem to be the cheapest.
I'm buying more commodities as we speak. Now you have, uh, started or you've launched an ETF, uh, the Rogers commodity index fund back in the nineties. What were the components of this index and how did you decide. Uh, the percentage of allocation of components when you launched this ETF, I have to go around the world, but I, and I realized that the commodity bull market was about to start.
I wanted to invest in an index because I was going to be traveling. I looked at all the indices. None of them were, I wouldn't invest in any of them. They were all hopeless. So I came up with my own. There were over 35, uh, components. And it was basically because I wanted it to be a worldwide index. Many of the.
Indexes were pretty now that existed. And they were mainly U us century. I wanted something that would enter international, the cost of doing business, the cost of staying alive. And so the over 35 components, right? Nope. And the weightings were essentially based on you. I mean, oil was much heavier than sugar.
Because we all use a lot more oil and we use sugar in our labs. Okay. Now, uh, how do you feel about oil today with, uh, the economy on the verge of recovering? Like you've mentioned, uh, analysts have said that energy is another breakout commodity for 2021. Do you agree with that? Well, one was in the process of making a complicated bottom, um, you know, bottoms go up and down, up and down and go sideways for a while.
And then eventually they turn around and go up, you know, known reserves of oil, continue to decline except for fracking. But that fracking bubble has burst before. If you could spell fracking, they would give you money, but now that's over, you have to make money. And so we're beginning to see. Bottoms developing in energy because it takes awhile.
And because of the demand, which is down a lot, but we're making a bottom. I have no idea of what it is. 2021, 22, 23, but then it'll turn around and start going up again. What about, uh, let's talk about gold and silver. Now I know that you, uh, I know that you've studied gold and silver quite a bit over your career.
And, uh, you, you, you told me last time that. Gold is not a currency. And I, and that stuck with me. A lot of people think that gold as a currency, but that's a misconception. How would you define gold today? Given today's macro economic landscape? What is its role? David gold is a, is a currency. Can you go down to the shop and buy bread with gold?
I doubt very seriously. If anybody's going to take, take gold as a currency anywhere, and it may be a few shops, but very, very few in the world. So. You can define it as a currency as we want. It really doesn't matter to me. Um, gold is a commodity which has been around for centuries and will continue to be around for centuries.
Whether we like it or not. I'm an old peasant and us old peasants know when things go wrong, we better have some gold. We better have some silver in our closet or under our bed because it's, what is the thing which will get us through. When governments or currencies started having problems, you've studied also commodity cycles.
Can you tell us where gold right now is currently in the, in the larger Supercycle? Well, gold is near its all time high. So gold is near its all time high. I don't know what else I can tell you. Um, it's not making load, I'm not buying gold. Uh, lots of people are being forced to sell their goal to buy food right now, especially in India, which is the largest gold country in the world.
Uh, but I will be buying more gold and I'll be buying more silver, uh, later. I'll buy more silver than gold because silver is much cheaper on a, on a historic basis. You're right. Gold is all at an all time high where near its all time highs, analysts has spoken to have said that even though it's reached all time highs, this is just the beginning of a larger bull run into, uh, into potentially even newer highs.
Can you, can you see that happening? Yes, no, I suspect the suspect there right this time, because there's going to be great turmoil, certainly in the next two or three years in the world long, have we talked before about gigantic amounts of debt? We talked about how a bubble is starting to develop in some stock markets.
What was always in when that ends and when all this debt comes crashing in on all of us, many people are gonna. Trying to go to the silver again, finally, in Jim, I let to ask you about monetary policy in your career of observing different federal reserve chairs and bores. Uh, how is it possible that we have stimulus on such a large scale today?
It ha would this have been possible back in the eighties or seventies? No, of course not William and the machetes named Martin in the sixties. Wouldn't you kidding me? No, no, no. Those were the, he was the guy who came up and said, well, my job is to take the Punchbowl away when people started having fun.
When they're not having fun, I give them all a punch. They want it when they start having too much fun. I take the Punchbowl at home. You know, Volcker was another guy like that. But since then, last 30 years, India had a good central banker for a while, but I cannot think of any decent central banker in the past 20 or 30 years, other than them now, central bankers are essentially bureaucrats and politicians who really don't have a clue.
They, their job is to keep their job. And the way they keep their job is to keep people happy. And that means print money and spend money and borrow money. Is there any way that they could reverse what they've done in the last couple of years? Can they stop printing money? Can they raise interest rates?
Can they put an end to limited quantitative easing? Can they, of course they can. Will they? No, of course not. No, no, no. You think any of those guys are going to do that. They all want to keep their job. If, if they call up mr. Bond and say, well, mr. By next week, we're going to start interest rates going back to 2%, 5% you kidding?
Oh my goodness. So was politically, well, I cannot think of any country. I mean, I told him the bank of Japan. He, he prints money every day and buys is much, uh, any bonds and ETFs and stocks as he can. It's happened in England. I mean, England's using MMT more money today. They're not announcing it. But they're just printing as fast as I can.
I don't know. Russia's done a less bad job. China's done a less bad job, but none of them have done a good job. Right. Okay. Well, Jim, uh, I want to thank you again so much for your time and, uh, for sharing us your thoughts. Thank you very much. My pleasure, David. Thank you. Let's do it again. Absolutely. Looking forward to it. .