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Jim Rogers: Paramount Advice to All Investors

Posted by Jim Rogers via Michael Campbell's Money Talks

on Tuesday, 30 November 1999 0:00

In the Investment World, Rogers is remarkable. Unusually gifted. He is a legend.

He first became recognized when his Quantum Fund averaged 420% a year over a 10 year period while the S&P 500 averaged just 5% a year. More recently Rogers forecasted the China Boom and the Commodity Boom well before they began.

On May 2012 he remarked during an interview with Forbes Magazine that “there’s going to be a huge shift in American society, American culture, in the places where one is going to get rich. The stock brokers are going to be driving taxis. The smart ones will learn to drive tractors so they can work for the smart farmers. The farmers are going to be driving Lamborghinis.

Jim Rogers: Paramount Advice to All Investors

1. To avoid making mistakes in this and future investment markets keep an eye on the Federal Reserve and Washington.

“Mr. Bernanke has no clue about economics or currencies, and no clue about how markets work. You have to be very careful and watch those guys. Many people for some reason have some kind of faith, even worship of the Central Bank like they know what they are doing. Its has only been in the past few decades people even knew who Central Bankers were. Nobody knew about these guys 100 years, 80 years ago yet know they have become exalted and that is a bubble.

Fortunately Central Bankers are going to pop and this particular crisis may well lead to it. In America we’ve had 3 Central Banks, the first two disappeared and this one will too in my view. They are making such horrible mistakes. “

2. “The other thing to watch out for is please don’t follow the crowd. When everybody is doing something, especially these days, you have got to go the other way.” Gold was up 12 years in a row. “I know of no asset in World History that has been up twelve years without a decline. So Gold has been acting very very strange in the last twelve years and It had to go down for a while. Well it has.”

“Be very very careful when something is accepted, this is age old advice but it is especially true in the markets today. Like the Japanese Yen right now, when over 90% are bearish then you have to go the other way.” Jim is long the Japanese Yen. He knows he may not be right but he knows he will have made an intelligent decision.

3. “There is always Extraordinary Change Going On.” Rogers goes further and says that there has been no time in his life when there hasn’t been “Change Confusion & Complexity”.

Writing is his book Street Smarts he makes the point that:

“You can take any year you want in history, then look at the world 15 years later and it is nothing, NOTHING, like it was before”

As an example in 1930, 40, 50 we had Depression, then War, followed by the beginning of suburban America. Just dramatic changes. “Nothing we know today , everything we think is true today is going to have changed 10, 15, 19 years from now. It always, always, always has been and always will be.”

4. ” The world changed in the 1920’s, 30’s,as Capital moved from the UK to the US exacerbated by a financial crisis and mistakes made by the politicians. We have another change taking place in World History right now. This time Capital is moving from the largest Debtor Nations to the largest Creditor Nations in the world now which are China, Korea, Hong Kong, Taiwan, Singapore, Japan.

The assets are in Asia, you know who the debtors are. You just have to look out the window and you will see some of it.”

5. “This is the first time in recorded History when nearly every Major Central Bank is printing money trying to debase their currency.” Japan was first, the US second, then the British followed. We have a lot of money being printed around the world. “If you ask me the US has been the major beneficiary because people are afraid of other currencies at the moment.” I expect this to end very badly because throughout history when you have had artificial money printing it has ended very badly in the country that it has happened. But this time it is happening in the whole World!”

“Some people are having a lot of fun right now. If you give me a trillion dollars I will show you a very good time. But I don’t think it is going to last.”

I hope you are worried, you should be.”

About Jim Rogers

In the Investment World, Rogers is remarkable. Unusually gifted. He is a legend.

He first became recognized when his Quantum Fund averaged 420% a year over a 10 year period when the S&P 500 averaged just 5% a year. More recently Rogers forecasted the China Boom and the Commodity Boom well before they began.

U.S. stock markets just keep going higher and higher! How much higher will they go? I am forecasting another 25% higher for U.S. stocks! The ‘bullish trend’ from the breakout continues, as expected. Breadth has become strong, once again, including a new all-time high on the SPX Advance/Decline line to match the new all-time high for the SPX. My breath thrust index reissued another buy for the SPX on May 31st, 2017. Once the markets wake up and realize that there will be no U.S. tradewars, they will then begin their assent.

ADLINE:SPX Daily Chart

THE BIG PICTURE

The Fourth Industrial Revolution, which will be referred to as ‘Tech Hypergrowth’, will be the enabling attribute of technology’s new central role within the global economy. Through technological innovation and investment, in developing infrastructures, companies are heading into an all new frontier.

Harnessing technology so as to realize undeveloped opportunities is a hallmark of ‘tech hypergrowth’. This approach leads to the now quite familiar phenomenon of innovation. Tech Hypergrowth Companies are employing both existing and recently developed infrastructures for growth. These new opportunities lie in ongoing and recent technology shifts, industry transformations and demographic and societal changes. Research indicates that ‘tech hypergrowth’ companies are highly data-driven and that data is enabled to adjust the fit between the technology, the business and its’ customers.

S&P 500 Chart

‘Emergency Stimulus’ Is Now Permanent

Last Friday, June 2nd, 2017’s Jobs Report supported the number of new jobs that are now expected. If the economy continues to contract, the Fed, in alliance with the Trump Administration, will increase their money printing which will, in turn, push gold higher.

This explains why gold prices rallied in response to the disappointing jobs report. There is no market crash on the horizon. In last weeks’ article, May 26th, 2017, I wrote (that) “When short-term sentiment becomes pessimistic, it creates a new entry signal to re-enter the SPX long. This is exactly what occurred on May 25th, 2017”.

We still remain extremely bullish with a stop/loss at 2400. There is major support at the 2400 level. This level used to be strong resistance, then became major support in the May 2017 breakout.

S&P 500 Daily Chart

Historically, the best sectors were dominated by staples, utilities and health care which had shown consistent positive returns.

Understanding correlations in complex financial systems is crucial in the face of turbulence, such as the continuing ongoing ‘financial crisis’. The strong breath and new highs support the advance of the SPX as it continues on its’ gains.

The New Bear Market Of Interest Rates

In recent decades, this has led to a further decline in interest rates, almost every time, along with a rally in the more defensive sectors of the stock market.

TNX Daily Chart

Over the past 36 years, the ten-year Treasury Note Yield has preceded a new downtrend in interest rates, virtually every time,when they have reached major support. Yields dropped an average of a 11% over the following year and declined 9 out of 11 times.

As interest rates continue to decline, it is great for bond funds, but not good for banks. The SPDR S&P Bank (NYSE:KBE) is near its 2017 low as depicted in the chart below.

BKX Daily Chart

The U.S. dollar index closed last week at a new low for the move at 96.67, down 47 basis points on Friday, June 2nd, 2017 (0.48%). The dollar’s trouble came when the government jobs report announced only 138,000 new jobs were created last month. This fell short of economists’ expectations and lower than that of April of 2017. Dropping yields are a driver of currency exchange rates and forecast future lower interest rates.

The U.S. dollar clearly took a hit from the May jobs report with expectations of the Fed raising U.S. interest rates beyond June. From a technical standpoint, the Dollar Index is bearish on the daily charts. With the lack of confidence that the Fed will not take any action beyond June, the dollar has been pushed further into a new bear market territory but price is nearing critical support and I do feel a short term bounce in dollar is near.

The Decoupling Of Correlated Asset Classes

In financial systems, correlations are not constant, all the time, but rather, vary over time. Reliable estimates of correlations are necessary to protect a portfolio. I find that the result that the correlation among different ‘asset classes’ scales ‘linearly decouple’ with market stress.

Consequently, the diversification effect, which should protect, melts away in our current financial times. My empirical analysis is consistent with the interesting possibility that one could anticipate diversification breakdowns.

In our very leveraged financial markets, the ‘leverage effect’ can decouple the traditional relationships correlation between the asset classes.

It is crucial to understand the fundamentals of the capital processes that are currently in play. President Trump is preparing for a major shake-up at the Fed. There are three vacancies coming up at the Fed’s Board of Governors. President Trump is preparing for a series of new appointments to the Fed. He is considering a former Federal Reserve Economist, who advocates the implementation of negative interest rates. The administration has been saying that it plans to deregulate the old rules that were imposed on Wall Street in the aftermath of “The Great Financial Crash of 2007”.

In January 2018, the term of Fed Chairwoman Janet Yellen will expire. The president is undecided whether he will reappoint her or seek a new appointee for this position.

In my opinion, President Trump wants a weaker dollar which in return will boost profits in U.S. corporation.

ATP 2017 Vs. SPY

TRADES IN MAY:

Amicus Therapeutics Inc (NASDAQ:FOLD), up 18% in 6 Weeks
Direxion Daily Small Cap Bull 3X Shares (NYSE:TNA), up 5.9% in 11 Days
Direxion Daily Energy Bear 3X Shares (NYSE:ERY), up 4.75% in 2 Days
iShares Silver (NYSE:SLV), up 3.2% in 5 Days
Mobileiron (NASDAQ:MOBL), up 15% in 7 Days
FOLD, up 9.5% in 40 Days
Direxion Daily Gold Miners Bull 3X Shares (NYSE:NUGT), up 81% in 27 Days
VelocityShares 3x Long Natural Gas linked to S&P GSCI Natural Gas Excess Return (NYSE:UGAZ), up 74% in 14 Days

MC Big Implications For The US dollar, Stocks & Positives For Canada

Posted by Michael Campbell

on Tuesday, 22 December 0972 16:27

One of the main themes on Money Talks since 2010 has been the breakup of the EU and the demise of the European Welfare State Model. That process has already pushed trillions of Euro’s into the US and to a lesser extent Canada. Two more significant signs occurred this week….find out the 2 signs HERE

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