May 23, 2003: The full interview with Jim Rogers
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Earlier this week, Wall $treet Week with FORTUNE co-anchor Karen Gibbs sat down with renowned globe-trotting investor Jim Rogers. Portions were used on the May 23 broadcast. Here is the complete text of the 19-minute discussion:
KAREN GIBBS: Jim Rogers, welcome to Wall $treet Week with FORTUNE, and welcome back from your second around-the-world, record-breaking trip. What did you learn differently about the global economy than you did on the Investment Biker trip?
JIM ROGERS: Well, that the world is always changing, there are new opportunities. Things that we think are true five years ago will not be true today, and things that are true today five years from now will be changing. You have to be flexible if you're going to be in the investment world. In fact, you have to be flexible if you're going to be in any world.
GIBBS: In fact, you also say you have to be right, but you also have to be a little contrarian. And you definitely are contrarian in some of your investment picks around the globe. Let's, kind of, go through them.
ROGERS: Well, Karen, yes, you're right. They call me a contrarian, but the trick to making money in the investment world is to buy things which other people are not buying by definition, because those are the things that are cheap, so I guess that does make you a contrarian.
But if you look around the world, there are some wonderful opportunities right now. China is a great place to invest. There are great things happening out there.
GIBBS: Let's talk about China. Why is it so great to invest in?
ROGERS: Well, they call themselves Communists, Karen, but they are among the best capitalists in the world right now. They save and invest 35 percent of their income. They work from dawn to dusk. Here in the United States, we save 2 percent of our income. You know, we're always looking for an extra day off. They have unleashed capitalism again and entrepreneurship, and they're on the rise.
GIBBS: Now, you fortunately made it out of China before this recent attack of SARS. How is that going to impact the whole Asian economy?
ROGERS: Well, it has affected the economy. Nobody's flying. The hotels are empty. The planes are empty. The restaurants are empty. But in my view, it's a temporary thing. It's probably a great buying opportunity to buy companies there, especially travel-related companies.
GIBBS: China has always been very, very closed, though, to individual investors. Have you seen that change now? And how could individual investors take advantage of China?
ROGERS: No, no. They are opening up. They are very excited to have foreigners invest there now. There are several ways. You can go there and open an account, which is what I did. There are many Chinese companies which trade on the New York Stock Exchange, on Nasdaq here. There are mutual funds; I don't know the mutual funds, but I know they exist. There's always a way to invest in a new market.
GIBBS: What about the fact that their currency is fixed when other currencies float? And that does seem to be an impediment to investing.
ROGERS: That is a very good question. Yes, they do have a fixed currency. That's going to have to change. It's a holdover from the Communist days. Now that they're a member of the World Trade Organization, they'll have to let their currency float. My view is that once they let it float, it will probably go down for a day or two, because people will be trying to get their money out of there. But I'm going to be putting my money in, and I'm not the only one. I know a lot of international investors will flood into China once they let the currency float.
GIBBS: How about Africa, particularly Angola? I mean is the 20-year civil war over? Are you interested in that country?
ROGERS: Karen, if there were six of me, one of me would be in Angola right now. I am so excited about Angola. One of the things I've learned from my investing career and from history is when a long, vicious war ends, if you go there you're going to make a fortune, even if you're a dimwit -- and I'm a dimwit, so I definitely would like to go there. It's just an enormous opportunity. They're going to be the largest producer of oil in Africa within a few years. They've got diamonds, they've got agriculture. There are only 10 or 12 million people. It's a beautiful country. Enormous opportunities.
GIBBS: It's the natural resources. But I'm still concerned about the specter of war, and in fact you've got war going all over the world. Do you see any other opportunities in these war-torn countries?
ROGERS: Well, if you look at Ethiopia, Ethiopia is another country that's had a long war. I'm optimistic about Ethiopia.
GIBBS: Didn't the World Bank call that like, the second-poorest country in the world?
ROGERS: They do, but if it's the second-poorest, that means it can only get better. You know, the trick to getting rich is to buy low and sell high. I know your parents taught you that, Karen. I've known you for years. You know how to buy low, for goodness sakes.
Yeah, you go to these places when they're poor and when they're downtrodden, because then they want to get rich. And that's when everybody's demoralized, there's no capital there, and that's where the opportunities are.
GIBBS: Now you also talk about buying low and selling high, but you like to hold onto things forever. When do you decide to sell something, Jim?
ROGERS: Well -- yes, it's better to own something forever. First of all, you don't have to pay taxes if you never sell it. And I try to find things that are going to be a long, long, long term investment. Botswana is a country I bought in 1981 -- 1991. I still own every share I've ever owned in Botswana. But if Botswana does start turning bad, if they start electing the wrong politicians or the natural resources run out or something, then you'll have to sell.
But so far I much prefer -- and it's a much better way to invest as far as I'm concerned. I'm not a good trader. I'm probably the world's worst trader that you will ever know -- so I have to invest for the long term.
GIBBS: Looking at Tanzania, you see wonderful opportunities there. Is it because of the raw material?
 ROGERS: Yes, there are enormous raw materials, and I'm very bullish on raw materials. But Tanzania has been a country which has been closed off for decades. And if you want to go to Africa and you want a tourist experience in Africa, it is the single-best country. It's got everything. You'll see the best game. They've got Zanzibar with the Arabs and the spices. We climbed Kilimanjaro on our trip. They've got black Africa, they've got Arab Africa, they've got beaches. I mean it's all there, Karen.
GIBBS: It's all there for the picking pretty much.
ROGERS: And you can all do it in one country. You don't have to go to five or six countries and hope. It's all there.
GIBBS: We're talking about the five or six countries that you're interested in, but you covered what, 116 countries on this record-setting tour? And you're actually invested in, maybe 28 of them that you find really interesting.
ROGERS: There are good opportunities around the world, some in Africa, some in Asia, Australia I'm invested in, New Zealand I have investments, Canada I have investments. Malaysia is a natural-resource-based country. It's run by a madman, but he's going to die soon or going to leave. He says he's going to retire at the end of this year. Even in places like that there are good opportunities.
GIBBS: Take another one, Myanmar, the old Burma, and there's a lot of unrest there. Tell me why you find that so attractive.
ROGERS: In 1962, it was the richest country in Asia. It closed off and deteriorated, collapsed. But now they're trying to open up again. It has been a nightmare.
But the new generals -- the old generals were terrible guys -- they're trying to open the country up again. It's very cheap. They have a disciplined population, they have an educated population, huge natural resources. Their neighbors are India and China, pretty big markets. And the Japanese are pouring in. Everybody's pouring in there with money now. So we should all go there.
GIBBS: And you've got some very strong words to say for those countries that do want to be isolationist or really close their borders. What do you tell those countries?
ROGERS: Well, you look at Burma. They were the richest country in Asia. They close their borders, and they collapsed. Look at Ghana. Ghana in 1957 was the richest country in the British empire. They closed off. They said we don't need the foreigners anymore. Seven years later they were bankrupt. I mean look at history. It shows you the best way to have prosperity and an open economy and an open society is to let in the outside world, and you will prosper.
GIBBS: Let's come to the Americas now. Let's start with South America, because you seem to really like Bolivia. And why it stands out between Argentina or Brazil is amusing to me. Why?
ROGERS: Well, Brazil and Argentina have elected madmen periodically in their history, and they've got great promise but bad politicians.
Bolivia has been a basket case. It's had more governments in the last 200 years than anybody, but it's a nightmare -- was. But they've had stability for the last 20 years, and now, Karen, they have discovered huge amounts of natural gas. There's nothing like finding a lot of natural gas to change your outlook. Small, small population, 8 million, 12 million people, lots of natural gas. We in the U.S. have a huge shortage of natural gas developing. We've got to buy it somewhere. So Bolivia, the fortunes of Bolivia, are about to change.
GIBBS: None of the countries that you've mentioned are involved in Europe, and I want to bring up the dollar and the euro. And you have said that you thought the euro was pretty flawed. Do you still feel that way?
ROGERS: I own the euro, and in my new book I explain I own the euro, but I also explain that I don't expect the euro to survive. I think 10 years from now or 15 years from now it will fall apart.
Yes, the world needs a replacement for the dollar. The dollar, we have the largest debt the world has ever seen. We have a huge balance-of-trade deficit. It's not getting any better.
Europe, the euro, has the opposite. They are creditors and they have a balance-of-trade surplus. So the world needs something like the euro. Unfortunately, they put it together in a bad way.
GIBBS: Now a lot of people here in the United States, because of the dollar's decline and the euro's strength, are screaming deflation. Investors are wondering what in the world to do with their money against this back drop of deflation. First, do you believe that deflation is a problem? And second, what should U.S. investors do?
ROGERS: Karen, now you know everybody watching this show, they go shopping, they buy insurance, they go to the movies, entertainment, education -- prices are going up out there. The government tells us they're not, but everyone knows prices are, in fact, rising.
Now the Federal Reserve -- Greenspan and the other governors -- have said we are not going to let there be deflation in the United States. We will print as much money as we have to. We will buy bonds, we will buy gold mines, we will buy real estate -- we will buy anything we have to, to drive prices up.
I happen to believe them. I don't think its good for the country. I don't think it's good for any of us that they're debasing our currency. It has never worked long term in history. They don't know that. They are not competent enough to know that. They are going to drive the dollar down and drive prices up. There will not be deflation. There will not be deflation in the U.S.
Maybe eventually, eventually after the inflation gets out of hand, then we might have deflation. But don't worry about that question.
GIBBS: Well, against that backdrop, where do you see our U.S. stock markets going?
ROGERS: Well, I own U.S. shares. I have no shorts (short-selling positions), as you know...
GIBBS: That's unusual for you.
ROGERS: Yes, we have known each other a long time, haven't we? I almost always have sold something short as a hedge, if nothing else. At the moment, I have no shorts.
GIBBS: That means that you're kind of bullish.
ROGERS: That means that I have been very bullish. For several weeks or months, I have been extremely bullish. There was a lot of hysterical selling in the market last summer and fall, a lot of sloppy -- a lot of panic selling. Stocks came down. Since then the Federal Reserve has been printing money, Bush has been spending money as fast as he can. All of that means the market -- meant and means the market will do better. So I own shares at the moment. We've had a good run.
I may start selling next week, next month, I don't know. There is an old adage in the market: Sell in May and go away. We still have a few more days in May, so I may wind up selling some in May. But not yet.
GIBBS: And how about those that dumped the stocks and jumped into bond funds? Did they do the wrong thing at the wrong time?
ROGERS: Yes, yes. Unfortunately, I wish I had -- It's like my mother, I tell her all the time, "Mother, don't buy what everybody else is buying," and right now everybody is buying bonds. I'm not optimistic on bonds. I own some bonds, I have started selling bonds as a hedge. I would not at this stage jump into bonds in a big way. And we've had a move, bonds have skyrocketed for 20 years.
GIBBS: How about real estate?
ROGERS: Well, real estate, Karen, depends on where you are. There is a mania, a housing bubble going on. But if you're going to buy a second home, buy a lake house in Iowa, because Iowa is a natural-resources-based state. I'm bullish on agriculture. I'm bullish on natural resources. So houses in Iowa will probably do well. Don't buy it in Boston. Boston is a financial town. I'm not that optimistic on financial companies or financial areas. So buy in Oklahoma, buy in Colorado, buy in states where the economy is going to get better. Stay away from places like New York and Boston -- where I live -- because real estate there will probably not do well.
GIBBS: So financial areas and financial stocks you're not really high on. What stocks here in the United States, what sectors, would you say are poised to do well?
ROGERS: I'm optimistic on raw materials, natural resources, commodities, call them what you will.
GIBBS: And this is more than just gold and crude, right? Give me something else.
ROGERS: Oh yeah, it's everything.
Silk. We don't produce a lot of silk in the U.S., but in Asia they do.
Everything. Agricultural products. Zinc, copper, lead, soy beans, rice. I'm optimistic on all agricultural products and all mine products, as well as oil, gold and the rest of it.
GIBBS: How do you get or how do you explain that to investors who have been so burned by the last three years of bear markets that they don't want to invest in the U.S. stock market at all, and they've totally closed their mind to the international arena. What do you say to them?
ROGERS: I say, "You can." You can go in the international arena.
There are over 5 million people out there, a lot of them are making money and having great successes. Look around your own home you will see things that you have imported, whether it's television, cars, or whatever it is. There are magnificent opportunities, don't close yourself off, because you might miss huge opportunities to make money.
But most important, Karen, stay with what you know. If you know a whole lot about the automobile industry, you might want to buy BMW or Toyota or something. But don't buy any automobile company unless you know a whole lot about it. If you do, stay with it, figure out something and get rich.
GIBBS: I've read your book. It's a wonderful read. I've been around the world with my own Phineas Fogg, the modern-day version. But let's talk about some of the fun things that you did. I saw that you corrupted the monks. I believe that was in Ethiopia, wasn't it?
 ROGERS: Yes I did, you're right. I was in Ethiopia. We stumbled into this little village on the most important religious holiday of the year, called the Finding of the True Cross and these young men had just become monks and I said, "Let's have a beer," and we started drinking beer. And these guys held their beer better than I did, I have to say. Maybe just becoming a monk will help you hold your liquor.
GIBBS: And I should say that you didn't do this trip all by yourself. Your wonderful companion and now your wife, Paige came along with you. This was her first time around the world?
ROGERS: When Paige set out, she had not traveled very much. And so at first, I mean she's like everybody she's like "This'll be easy, I can do this." For the first few weeks or months, she found that this was not so easy. And it was a very tough trip. But by the end of the trip, she's as good an overland trailer as I have ever met in my life. She can cross a border with the best of them. We got married on the trip. We got married on January 1, 2000.
GIBBS: How romantic.
ROGERS: It was romantic, and we're having a little baby next month, next week, in fact.
GIBBS: Congratulations. It's probably going to be you're greatest adventure yet.
ROGERS: Oh, I'm sure, I'm sure. People say what are you going to do next, I say I've got to meet this little girl and we'll see. And I'm sure she is going to change my life.
GIBBS: What was the most surprising thing you found on this most recent trip around the world?
ROGERS: That we made it back alive. We shouldn't be alive, Karen.
GIBBS: I saw you with pictures of Angolan soldiers, and I wasn't sure if they were friendly or not. What was going on?
 ROGERS: They were not friendly at first. We went though several war zones. The general made us stop and camp with him on the side of the road. they were protecting the city. In the end, we became good friends, we took Polaroid pictures and gave them to them. The general loved the Polaroid picture of himself. And all his little soldiers did too. It was one of several war zones through which we went. We went through jungles and deserts and epidemics and blizzards, wars. So the biggest surprise is that we are alive. I look at the map now, Paige and I look at the map now, and we say, "How did we do that? How did we make it? Even any single continent. We shouldn't be alive. 152,000 miles, 116 countries.
GIBBS: It's amazing.
ROGERS: Well, we're very happy to be alive, I promise you. Surprised and happy.
GIBBS: Do we here in the United States get a really true picture of what is going on in these economies? I saw pictures of incredible market places and there's gold and jewelry to be sold everywhere, they take Visa and American Express cards, that sort of thing. What are we missing here in the United States?
ROGERS: Well, it is a shame and it disappoints me that we are, that we have been closed off. Geographically, we are away from everyone else, and we never really needed to know much about the rest of the world as we have had a very good 100 years or so.
But there is an enormous amount going on out there and it grieves me that we as Americans don't know more about it, and don't go out there and find out more it. There are people doing extraordinary things, there are wonderful things happening in Africa, Asia and lots of parts of the world and Americans miss it.
If I had my way, we would all get in a car and head off. You know, Karen, there was a study done recently which showed that the single most, biggest fantasy is that they are just going to quit, they're going to get in their car, and they're going to take off and drive around the world. I'm nuts enough to do it, and I have done it twice now, so there's clearly something wrong with me.
GIBBS: Let me ask you this. I don't want to bring up too sad of a note. But while you were on this trip, your father passed. And he wanted you to do this, he didn't want you to stop for anything, And when you came back, you visited his grave site and you tried to put it all into perspective. Can you just put it into perspective for me right now?
ROGERS: Well, my father did say before we set out, he said "Jim," -- he had terminal cancer -- he said, "No matter what, this is the only thing I envy, and no matter what you do, what don't stop your trip for me." He almost made it. He died five months before we got back. My mother, on the other hand, said, "Now listen, if something happens to me, you get back here right away. I want you to come home as soon as you can."
But I did go back and see my father. I certainly owe a lot to my father. He was very influential in my life and I now hope that I can take my little girl around the world and show her as much of the world. And certainly there's a lot of the world that my father never saw and that none of us see, that most people don't see.
GIBBS: Does the fact that you now have a daughter on the way does it change your view? Are you worried about deficits? Are you going to teach her Chinese?
ROGERS: Oh yeah, The first thing we are going to do is teach her Chinese, we are going to make sure that she learns Chinese. Chinese is going to be the most important language in her lifetime and English, of course.
But I'm extremely worried about deficits. We in the United States owe trillions of dollars. This poor little girl is going to be born in May of 2003, she's never going to be able to pay off those deficits in her lifetime. I'd like to change that in our country.
I'd certainly like to teach her the importance of sound economies, and sound political systems, and I'm going to show her the world.
GIBBS: Wonderful. Jim Rogers, It is such a pleasure to see you again. Thanks for joining us.
ROGERS: Thank you, Karen and you come with us on our next trip.
GIBBS: I certainly will.
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