Interview with Jim Rogers: Adventure Capitalist, Commodities King, Sugar Daddy..., part 3
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[Continued from part 2.]
Slepko: In Adventure Capitalist , you wrote that the most certain way on earth to make money is to set up a private for-profit school in China. Do you still hold that view? [After the Rogers International Commodities Index (NYSEMKT: RJI)], what is the second most certain way?
Rogers: Well, I doubt I said “the” most certain, but I probably said “a” certain. (There’s no such thing as “the” most certain.) Right now, agriculture in Myanmar is probably “the” most certain way to make a fortune – if one can execute. I am sure many people opened schools in China and didn’t do well, just like I am sure plenty of people are going to open farms in Myanmar and aren’t going to do well. You have to be able to execute, no matter how good your idea is.
Slepko: When you talk about a farm, what are you thinking of in your mind? I think most people’s reaction is a little house on a prairie somewhere, but are you talking about a simple farm like that whether it’s in Myanmar or Japan? Or are you talking about some sort of modern version where you actually have a background in agronomy or something like that?
Rogers: It’s up to the person. If you know nothing about farming, I would suggest you start small. I would not suggest that you borrow $50 million and start a gigantic farming operation. But if you already know about farming, then sure, go ahead and start big.
It’s not just about farming. If you don’t want to go into the fields every day, open up a Lamborghini dealership in an agricultural area. Or open a chain of restaurants or a chain of retail stores. It depends on what you know a lot about. The agricultural belts are going to where the money is. Open a fertilizer store, open a tractor distributorship. Arrange to participate in the boom in Myanmar, and the boom in agriculture.
Years ago, during an exchange on PBS, Rogers recalled the '70s when commodity prices were high. Eschewing an expensive bottle of wine, his brother gave him a five pound bag of sugar as a dinner party gift. In a recent interview with Australian television, Rogers laid out his case for the current commodities boom:
We’ve had eight or nine periods like this before in the last 150 years like [1906-1923, 1933-1953, 1968-1982] …It doesn’t mean it will be fun watching history be made, but the way you make money coming out of periods like this is finding the things where the fundamentals are unimpaired… Unfortunately, most things have been impaired. General Motors (NYSE: GM) has been impaired. Bank of America (NYSE: BAC) has been impaired. The only thing I know that hasn’t been impaired are raw materials, commodities… Farmers cannot even get loans for fertilizer right now, so you are going to be having fewer products, fewer real goods coming out in the future. Nobody can open a zinc mine any more, you can’t get any money to open a zinc mine. So, supplies of everything are going to continue to decline.
All those people that got MBAs should turn them in and get agricultural degrees because in the future it’s the farmers, the miners, the lumberjacks, the people that do real things that are going to make money. Finance is going to be a disaster.
All those 29-year old [stock brokers] driving Maseratis are going to have to learn how to drive taxis – and the smart ones are going to learn how to drive tractors.
We have a very serious shortage of farmers in the world right now. The people in the future that are going to make all the money are going to be in agriculture.
Slepko: Investing is not only a way to prosper, but a powerful tool driving change. Are there other ways to make the world a better place? Are any of them as powerful as investing? The social angle of investing has become a popular thing to throw out there, and most people don’t understand what they are saying, they are just trying to reinterpret socialism, but you are definitely not afraid of change, and are definitely a fan of investing, long-term especially. What are your thoughts on making the world a better place? Investing definitely, are there other career opportunities to do good?
Rogers: Everybody should pursue their own passions. Guys like [Bill] Gates was – and I presume still is – a terrible investor. He didn’t even try to be an investor. Instead he pursued something he was very good and he stuck with it. A guy named Tyson down in Arkansas was spectacular at raising chickens. [NS: A chicken in every pot?] That’s what he should have done, and what he did do. Don’t try to do what other people tell you to do.
If you like investing, are passionate about investing, and love it, then by all means become an investor. But as we have ascertained from the facts most people are not good investors. It’s wonderful to see the cover of magazines about Joe and Sally that have made fortunes from investing and you read the articles and it sounds so easy. Well, it isn’t easy, but it attracted staggering numbers of people because we had the long bull market. That’s in the process of changing.
When asked on Bloomberg and other cable networks about different approaches to the economy, a typical response by Rogers has been:
Yes, alternative energy has a great future, but wind power is only competitive at like $85 a barrel. Solar power is only competitive at like $125 a barrel…[T. Boone Pickens] is right -- wind power has an enormous future. Listen he may be doing it to make money, but fine. Nobody is going to do anything unless they can make money at it. People that changed the world have made money at it. You are supposed to make money at it, that’s the way the world should work. Most people who do things altruistically are not going to change the world. Sure there are some people like Mother Theresa who was a fabulous person who actually changed a lot of lives. But Henry Ford was not doing it for free. IBM was not doing it for free. They were doing it to make money, and they had an enormous impact on the world.
Slepko: What are you thoughts on Muhammed Yunus, Grameen Bank, and other microfinance ventures? Will Bangladesh emerge as a major force as a result of these wide-spread experiments with bringing capitalism to the uncapitalized?
Rogers: Sounds like a great idea, and at least in the beginning I guess it was, but it has collapsed as a concept. Isn’t the guy [Yunus] that won the Nobel Prize in prison? Or threatened with prison? But I don’t want to get into all that. It has nothing to do with him being right or wrong, but all of that is an indication that it might have been a great idea once in a small way, but since then – just like any other business – when too many people pile into it, when everybody piles into it, it becomes a problem with too much competition, too small margins, etc., etc. So, that’s my view of microfinance. No, it will not solve Bangladesh’s problems. It may make Bangladesh’s problems worse. We’ve had various types of things turn into Ponzi schemes, turn into pyramids, turn into disasters. Whatever is going to save Bangladesh is not going to be microfinance. Not now.
[Continued in part 4.]
Nick Slepko has no position in any company mentioned here at the time of publication. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.