Market Overview

Jim Rogers Likes Commodities, Living in Singapore; Dislikes U.S. Economy, MBA Mania

Benzinga Radio had the chance to speak with Jim Rogers, legendary investor and co-founder of the Quantum Fund, about his thoughts on S&P's recent downgrade of U.S. debt, the slowdown we are seeing in the American economy, and opportunities for investing elsewhere. Here is what he had to say.

On the significance of the US debt downgrade:

Jim Rogers: "It's meaningless. Anybody who's investing knows that the US has not been AAA. We're the largest debtor nation in the history of the world. Anybody who's investing because of this should not be investing if they think this is significant or news. This is not even old news; this is not news."

"This is not what is making the markets go down. The world's got serious problems including U.S. debt, European debt, and an economic slowdown. There are plenty of reasons for the market to go down."

On outlook for US growth:

Jim Rogers: "The federal government has been spending staggering amounts of money in the last three years. The people who got that money, of course, are better off. They're very happy; they've got a lot more money in their pockets."

"Overall, the situation is getting worse; it's deteriorating. America has quadrupled its debt to do this, so overall debt is much, much worse."

On the global effects of a U.S. slowdown and/or recession:

Jim Rogers: "Of course, if the U.S. is having a slowdown, it's going to affect lots and lots of people. It's going to affect the whole world; it has to. It's not as though this is some tiny, little economy. This is the largest economy in the world."

On where to put money in advance of global slowdown:

Jim Rogers: "I am long commodities, especially agriculture and precious metals, but I'm long all commodities. I am long some currencies. I am short emerging market stocks. I am short American technology stocks. I'm short large, international banks. I'm short government bonds… That's where my money is. Who knows if I'm right."

On the power shift from financial centers to producers of raw goods:

Jim Rogers: "What's happened, of course, in the last few years is now we have staggering amounts of debt in the system, we have huge numbers of MBAs, we have a lot of competition, and of course, you have governments all over the world coming down hard on financial types: banks, brokers, investment companies. They're raising taxes, they're raising regulations, they're putting more restrictions on them. Finance is going into a decline, both absolute and relative."

"At the same time, we have shortages of everything developing in the production world. The average age of a farmer in America is 58 years old. The average age of farmers in Australia is 58; in Japan, farmers on average are 66. There are huge, empty fields with no one to farm them in Japan. The producers of real goods have a great future ahead of them."

On the supply vs. demand outlook for commodities:

Jim Rogers: "If [aggregate] demand goes down, you're not going to make any money in Toyota or IBM, but you can make money in commodities with demand going down. In the 1970s, the world economies were in the tank--many of them were flat to down--and yet we had one of the great bull markets in world history in commodities because there was no supply."

"Even if demand goes down, I'd rather be in commodities, because a) there are shortages developing, and b) whenever that sort of thing happens, unfortunately, then governments print money. It's not the right thing to do, but in America, we have a central bank head who doesn't understand economics or finance or currencies--all he understands is printing money. That's what he's going to do. He's got the printing presses."

On commodity firm IPOs:

Jim Rogers: "We certainly can have temporary tops. In the 1970s, when we had this huge, bull market, there were plenty of times when commodity prices went down."

"That's the way markets work. Oil has gone down over 50% four times since this bull market started in 1999. If people don't understand how markets work, they should not be investing, I assure you."

"I don't really own many commodities stocks. I mainly own commodities. Yale University did a study which showed that you would have made 300% more investing in commodities themselves rather than commodities stocks over the past several decades. When I say commodities, I'm not talking about stocks--I'm talking about commodities. I'm talking about real stuff."

On living in Singapore:

Jim Rogers: "Singapore is on the equator so it's always hot, or always hot and rainy. Singapore has great education--best in the world, best healthcare in the world."

"Everything works in Singapore; it's wonderful to be here. It's not a third-world country like New York City or some of the third-world countries and cities I've been to."

"We moved to Singapore to make sure my children grow up speaking Mandarin, and of course, the education here is much, much better than in the United States."

Be sure to check out the audio of the interview in its entirety: Jim Rogers Likes Commodities, Living in Singapore; Dislikes U.S. Economy, MBA Mania

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