Doubting Jimmy

In the wake of Jim Rogers proclaiming the "UK finished" and bad things ahead for the pound, the Telegraph runs a piece seeming to doubt his status as an "investing legend." Yet says:

To be fair, Mr Rogers has in the past admitted he is not the best when it comes to timing, and that when it comes to short-term trading, he is "horrible".

Behind the sound-bites for which he has become known, he recently admitted that if it hadn't been for shorting US banks and investing in the Japanese yen, his own personal portfolio wouldn't have made a profit last year.

Mr Rogers has proven to be bang on the money in the past, and his current overriding mantra, that Asian economies will replace those of the West, will be no doubt proven correct in the long-term.

My take on Rogers is like that of Marc Faber -- I find them interesting in "big picture" views on things. I've never invested in anything because of what they've said, but that's no slam against them (I remember when Rogers used to be a Barron's Roundtable participant and one year recommended something like Sri Lankan tea plantations).

Rogers, as the linked article says, is a very long-term guy. I think he's been bullish on commodities since the mid-1990s, about the time I became aware of him. Depending on the year we start counting, that's 15 years or more. Which can seem like a long time, but in historical terms is a snap.

Comments

[Sivaram Velauthapillai]

The problem with Faber and Rogers is that they are not transparent and who knows what they own at any point in time. Jim Rogers also has far greater capital than any small investor and it's impossible to average down as Rogers does. Rogers, for instance, has been bullish on China for more than a decade but anyone that tried buying Chinese stocks in the last 2 years would be suffering mightily. Marc Faber is also hard to follow, especially because he is a trader. He gets in and out at will and unless one knew exactly what he was doing, it's impossible to say what he owns.

Anyway, Britain is going to face serious issues. Its real estate bubble is far bigger than America's--America also off-loaded some of the toxic mortgages onto foreigners--and its economy is less diversified than America's. It's not a pretty sight when British banks have 4x more liabilities than Britain's GDP. Having said this, who knows how their stock market will do.

[John]

@Sivaram: Agree with your Rogers/Faber comments. I guess Faber may say that subscribing to his newsletter is the way to keeping up with him. But last I checked it is too rich for my blood.

Regarding the UK, you're right about the housing bubble over there. At some point, a smart investor will comb any stock market rubble and score some bargains. Who knows?

[Sivaram Velauthapillai]

JOHN: "I guess Faber may say that subscribing to his newsletter is the way to keeping up with him. But last I checked it is too rich for my blood."

Unless Faber has multiple letters, the one I saw a few years ago was quite cheap, something like a few hundread per year, maybe even $99 per year (don't remember.) In any case, that letter I read before is primarily macro and although he does mention specific picks, he provides no analysis other than macro justifications. Like you said in your first post, he is good for thinking about macro but specific picks are too dangerous unless one does their own homework.

JOHN: "At some point, a smart investor will comb any stock market rubble and score some bargains. Who knows?"

I am trying to get my mind around what happens to companies in these countries, Britain as well as others, when their currency declines. There are a lot of British companies that are multinational or have high exports so a declining pound will help. If one was located in Britain, those companies would be easy picks but I'm not sure how it works for foreigners. These companies may benefit from a declining pound but my local Canadian dollar would appreciate, and I'm not sure how the market prices it. I remember Marc Faber saying that a foreigner who bought Argentinian stocks during their crisis in 2001 made a killing because the asset prices were dirt cheap in foreign currency (say US$ terms). I don't think Britain is anywhere near Argentina but a smaller effect may benefit foreign investors.

[David]

Regarding Jim Rogers' status as an "investing legend" - first off, he would be the first to agree with the Telegraph's (or any paper's) assessment that he is not "a legend". I don't know what he is like in private, but in public interviews he usually plays down that label (even though he is deserving of it, IMO).

See the intro to this Bloomberg interview as an example:

http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vCM4wglCjinI.asf

John and Sivaram: I was interested to hear your thoughts on Rogers and Faber. They are both favorites of mine (as far as analysts/investors go), but I think you are correct to point out that we shouldn't blindly follow anyone's investment recommendations.

It's also important to take note of the times when your favorite investors get things wrong (or neglect to mention that they've changed their views). It tends to keep both parties (forecaster and listener) honest.

[John]

@Sivaram: My memory is faulty. I checked the price of the "Gloom, Boom, Doom Report" (or whatever it's called) and I was thinking the price was up there in Jim Grant territory. Regarding the UK. If the pound crashes and your Canadian dollars appreciate in comparison, you could pick up quality British assets on the cheap, since they'd be priced in pence on the LSE. One good thing is that the UK is more shareholder friendly (like Canada and the US, for example) than many countries. The risk is that if we buy one or two stocks, then it's also a matter of buying the right companies.

[John]

@David: I put "investing legend" in quotes on my post because that is how the linked article referred to Rogers. I often link to stories I don't 100% agree with, or agree with at all, but find interesting nonetheless.

Make no mistake -- I'd love for America, my country, to be ruled by Jim Rogers. Reading his "Investment Biker" in the mid-1990s was a transforming experience for me.

[David]

Hi John,

Absolutely, I was actually responding to the Telegraph's assertion on the "no legend" debate.
Didn't read that as your opinion at all.

I'm also one to post articles and debate over articles I don't necessarily agree with, so we're very much on the same page :)

Rogers has some very interesting philosophies, and I've also learned a lot from reading his books. Still, I think he'd leave the politicking to guys like Ron Paul - who he cheerfully supported last year (while noting that his support was also probably a harbinger of electoral failure for any politician).