Stopped Clocks or Value Investors? Interview Insights with Jim Rogers and Peter Schiff
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Two of the the most outspoken bears on the U.S. economy over the past decade have been Peter Schiff and Jim Rogers. While critics may call them “stopped clocks’, they are often proven correct. Not because of the natural cycles of the economy, but because their thesis and conviction often prove prescient and play out eerily close to their predictions. Jim Rogers is the well known co-founder of the Quantum Fund along with George Soros. Peter Schiff, who correctly predicted the financial crisis in 2006 and again in his book in 2007, is especially known for his positive views on gold as a protection against a deflating U.S. dollar which he continues to believe will hit crisis levels. At the upcoming FundSeeder Trader Summit, Emanuel Balarie interviewed Peter to get his latest sentiments on the U.S. economy and Jack Schwager re-interviewed Jim Rogers for the first time since they sat down back in 1989.
As most seasoned investors know, you can’t extract outsized gains by doing what every other investor is doing. A different view or strategy is essential to beating Mr. Market in the long term. As we have seen from both Jim and Peter, a contrarian view can lead to significant outperformance in the long-term. But, just having an independent view and conviction alone doesn’t beat the market, it’s that unique perspective that others just don’t see which often creates value over a very long investment horizon. Since predicting the market is so difficult, if not impossible on a consistent basis, a long and patient runway is often key to investment success. As recently confessed to Jack, Jim Rogers said that he is the ‘worst market timer in the world’. While Peter was very public in his views about real estate and credit in 2006, he told Emanuel he was talking about the housing bubble as early as 2002.
Both of these investors have spent their careers investing on convictions developed from their experience and research. They have used pullbacks as buying opportunities and only sell into obvious bubbles. For example, Jim has only sold one Chinese stock in decades and has never sold his gold or silver positions despite outsized gains and volatility. Both Jim and Peter are very bullish on China, other emerging markets and negative on the U.S., particularly the U.S. economy and the all-mighty dollar. The U.S. bubble is deflating and both are steering clear based on what they believe will be a debt and currency crisis as the deficit continues to escalate. With a view that the dollar will weaken, it is no surprise that both remain bullish on gold, crude oil and other commodities. Jim believes there is a bottoming process occuring in crude, and the thought of solar panels making a significant impact on fossil fuel consumption will take a lot longer than we think.
What both of these investors find most valuable is history, so perhaps no surprise they agree so much on the current state of the economy and the potential disasters that lie ahead. Peter and Jim know that the ‘this time is different’ mantra is a false pretense and it is never different. Understanding the history of the markets is essential with the most obvious explanation being that the markets represent human biases, emotions, behaviors and impulses. Humans respond the same way they always have and because of that, history repeats more often that we think or realize. These investors are the epitome of independent, macro, long-term thinking and investing. Patient value investors who can hold true to their convictions and can stomach the short-term volatility, just like the great Warren Buffett, can experience extraordinary gains over decades. Hear more from Jim and Peter at the Trader Summit on February 8th, or get the all-access pass to hear them speak TODAY along with many other great insights from the FundSeeder speaker panel at www.summit.fundseeder.com.