Jim Rogers Discusses Global Risks and Investment Opportunities
STEVE DIGGLE: So Jim Rogers. Probably needs no introduction to a lot of people who are watching this, but under the assumption that not everyone would have heard of you or know who you are, you're a legendary investor, author, pundit, man of many, many parts. And a man who's always taken an unusual path through the world of finance. You've had a career which is probably unique. So it is well known, others less so. Could you give us just a very brief overview of how you came to be where you are now and this rather interesting path that you took to get there? JIM ROGERS: Well, I stumbled onto Wall Street by accident, because I wanted a job. I liked the guy who I interviewed, fell in love with Wall Street, because here was a place where I could do what I loved, which was following the world and knowing about the world. I was going to go to law school, and medical school, and business school when was a senior at university. I didn't go to any of those things after I could go to Wall Street. I had a reasonably successful career. Retired when I was 37, and I haven't had a job since. SD: I think it would be safe to say that "reasonably successful" is being overly modest. You were one of the founders of the Quantum Fund, one of the most successful hedge funds of all time. JR: Well that was a long time ago. You might as well ask me about my first wife, or ask me where I went to university or something. It was a long time ago. I haven't had a job since. I probably couldn't get a job. If I could get a job, I doubt if I could keep a job, since I wouldn't show up for work very often, since I like doing other things. I have traveled around the world a couple of times, once on a motorcycle, once on a car. My second and third Guinness Book of Records were going around the world. So I've been doing other things since. I moved to Asia in 2007, because I wanted my children to grow up knowing Asia and speaking Mandarin, since, in their lifetime, Asia's going to be the most important part of the world. And here I am in Singapore without a job. One of the things I wanted to ask you, and this directly touches on what you were just talking about, is in your very wide experience, what does it take to be an above average investor? Because by definition, most people, well, are either average investors, and half of people will be below average investors. What does it take, and how difficult is it, to be an above average investor? JR: Well, there are different answers to that question. I used to work for somebody named Roy Neuberger who founded Neuberger Berman back in the 30s, and Roy Neuberger was an astonishing trader. He would be sitting there reading the Wall Street Journal, and he would say to me, there's 100,000 shares of IBM on the floor-- Bid 90 and 1/8. I would say, what the hell is he talking about? So I'd go to the floor, and sure enough, 100,000 shares of IBM for sale. I don't know how he did it. He just-- he had a sense of watching that they had the tape in those days. He just had this unbelievable sense of timing and trading. He was a remarkable trader. Now, I'm horrible. He might have been the best trader I ever saw. Mike Steinhardt's another great trader. Some great old traders in the business. If you're going to be a contrarian investor, which you've been very successful at, and you've had some epicly great calls. I was in Asia when you started talking about mainland China when, even living in Hong Kong, no one thought there was a future for it. So you've got a record to prove it can be done. But I think for an awful lot of investors, both professional and people who do it with their own money, it's incredibly hard to end up with a level of conviction that allows you to be a contrarian investor. How do you develop that level of conviction? JR: Well, first of all, yes, you used the term "contrarian," and by definition, I guess that's right. I never thought of myself that way. A contrarian would just say, they're all buying x, I'm going to sell x. That's not what I do. SD: You're an independent investor. JR: Right, that's a better way. I like that. That's why I said I'm trying to teach my girls, think independently, to be curious-- first of all, to be curious to go look at that thing that nobody's looking at. And then to think independently and say, they all say this is terrible. But I know it goes into my brain, and I spin it around, and it comes out that I know this is going to be good in the end. When I first was in the business, I used to assume that everybody knew a lot more than I did. They were educated, and very experienced and everything, and so I just assumed if they said x, x was probably the case. It took me a little while, but not too long, to figure out they didn't know any more than I did. In fact, they might know less than I did, even though they were experienced, and knowledgeable, and well-educated. So I guess that came from experience. I was insecure like everybody else, but it came from experience. Said hey, when I see something like this, it's often right. Maybe I should do more and more of this. And I learned that from experience. Don't think I didn't make plenty of mistakes along the way. I was just thinking of one of my great mistakes along the way. But that built up my confidence. SD: Well, what would be-- JR: OK, back in-- there was a time when the market-- everybody was bullish. I became bearish. I put all my money into puts. And lo and behold, six months later, I had tripled my money. Everybody else-- I mean, it was really a massive bear market, and everybody else was losing their share. And on the day of the bottom, I sold my puts. I mean, bad timing. This was pure luck. And I said, OK, I'll wait for the market to rally, and then I'm going to sell short. I don't want to pay the premium this time buying the puts. So I waited for the market to rally, and it did rally. And two months later, I waited. And I sold everything I had in six stocks, so short six stocks. Well, two months later, I was wiped out. I had lost everything. But the main moral of that story is within two years, all six of those companies had gone bankrupt, literally bankrupt. I mean, I knew what I was doing. SD: So it's a sizing issue, or is it a timing issue? JR: Well, in that case, it was a timing issue. I told you I'm the worst trader in the whole world. I can prove it many, many, many times. Literally within two years, they were all bankrupt, but I went broke first because of my timing. SD: How do you know the difference between being early and being wrong? Because-- JR: You teach me that, OK? I'd like to know. I'm still trying to learn. SD: I really don't know, either. I mean, one of the things that has confounded, I think, all of us in this most recent unprecedented rally-- I mean, it's not unprecedented in history, but the sort of things that have gone up and the level of volatility we've had that's been unprecedented. The only period that I can compare it to are the late 90s, where just everything in a certain area went up. Now it was almost-- at least in the States, it's almost everything across the board. And there have been plenty of people who've wanted to short the FANGs, to short some of the tech stocks, to short some of these very expensive blue chips. And they've been very badly punched. And then even in the face of very good mutual fund investors, people with tremendous track records like Grantham Mayo, who have moved to a higher cash position- - they've seen massive reductions, because their own investors don't seem inclined to stick around and see how it plays out. So both on a personal and professional level, being early seems to be incredibly painful and destructive to your business. JR: Sure can. SD: So if you've got a conviction, do you wait for a change in momentum? Do you use moving averages, which is something that I know people have been used, and I've used something myself, which is to wait until the 520-day diverge, and that gives you a signal that momentum's coming out of a trade? Or do you just need to size it to a degree which you can be persistent? JR: Well, I usually-- since I know I'm always early, I make a decision and then wait, and just make myself wait a month, six months, whatever it happens to be. And I'm still too early. I'm still too early nearly always, because I make the decision too soon, I realize. So maybe I better start making the decision later in life. Sometimes, you just have to throw in the towel. Especially on the short side, you have no choice. If they're just racing against you all the time, you can sit there and meet the margin calls all day long, but one of the old adages is, never beat a margin call, which you may have heard from old-time traders. If you've got a margin call, just don't meet it, because that means something is very seriously wrong. SD: Right, that's your stop loss. JR: Yeah, well, stop losses are usually before a margin call comes. But I want to go back to something you said. You're not as experienced as I am, obviously, because you're not as old as I am, is what I'm saying. But I remember in the early 70s, there was something called the Nifty 50, and they were 50 stocks that everybody-- the JP Morgan bought everyday. Didn't matter. Avon, Xerox, IBM-- they were stocks that always were eternal growth stocks. And they just kept-- we would short them, and they just kept going up. They never stopped. Polaroid-- that was another. And they just never stopped going up. Everything else stopped going up but those Nifty 50, which would be something like the FANGs today, or maybe in the late 90s, some of the other kinds of stocks. So this has happened before in market history. They eventually crack, there's no question. And to today, if you look at the S&P 500, for instance, in the US, I think there are only 40 or 45 stocks that are above their 50-day moving average, to use technician's kind of talk. Everything else is in a downtrend. And yet the market is making all-time highs. SD: And so there's a lack of breadth in the market. JR: Definitely that lack of breadth. What is that-- over 90% of the stocks are in downtrends. 10% are in uptrends, but they're big companies. And since the S&P is capitalization weighted, those 50 stocks, 40 stocks, whatever it is, dragged the average to all-time highs. Now, that doesn't mean it's not painful if you short those stocks. Even if you-- well, if you shorted them yesterday, it's OK, because they collapsed yesterday. But basically, this has happened many times in market history. It gets narrower, and narrower, and narrower, the advance does, until it's just down to a few names. And eventually, they crack, too. That doesn't mean you're going to make it. I told you, I shorted six stocks once. They all went bankrupt two years later, but I lost everything first. So you have to-- SD: So there's a lack of diversification having all of your money in six shorts, though. JR: Yeah, but I knew I was right. Well, we've just started by talking about, how did I get the confidence? I knew I was right. But it was very early in my career. Well, that's how I learned. That's how I built my confidence. Because even though I lost everything, I was right. And so I learned, OK, it takes more than being right. Apropos of this conversation, it takes a lot more than just being right. You have to get your timing right, you have to get a lot of other stuff. I always assumed that everybody knew what I knew. I now know in those cases, nobody knew what I knew, because those stocks went up and up and up. There was a company, University Computing. I shorted the stock at 48. It went to 96. I had to cover before that, but then it went to 0. Well, I was right. Big deal. Big deal. But that helped build my confidence that I knew what I was doing, but it destroyed my confidence as far as market timing. SD: So what was different about your analysis? Had you gone deeper into this company? Because one of the things that you've said on a number of occasions, and I think it's very impactful, is if you want to have conviction, you have to know more than not just 90% of the people, but 98% of the people who follow the stock. Is it that you've gone deeper? You've read the annual report, you've looked at what would now be the 14k. Or was it that you'd seen something with a greater level of skepticism or objectivity which other people had missed? JR: Well, it's both. If read the annual report, you've done more than 90% of investors. If you read the notes to the annual report, you've done more than nearly everybody, including the CEO of the company. So it is certainly knowing more than other people. But then it takes more than that. You also have to know more, but then you have to figure out what does it mean? Just because you know more, you have to then analyze it. If 100 people go into a room and hear a presentation, Steve, they'll all come out-- most of them will come out with the same view. Seven or eight of those people will come out and say, aha, what this really means is it's going down the tubes, or whatever you come out with. Or seven or eight will come out and say, this is the best thing since sliced bread. They will realize. They will analyze it and understand it better than the others. It's judgment. I don't know how to teach judgment. I wish I knew how to teach judgment. Facts are wonderful. Knowing more than everybody else is a big, big, big leg up. But then judgment- - how you get judgment? And that's certainly what I didn't have. I certainly didn't have timing. Not that I do now, but I have a little better judgment than I used to, and a little better timing than I used to, because I learned to wait. SD: So your prescription to be an above average investor, to go back to my original question, is be independent-minded, do your work. Don't try and perfect the timing, but if you develop a high enough level of conviction around it, see it through. JR: Yeah, that's what I always do. And sometimes, I get it right. But I've certainly made plenty of mistakes in my life. I just told you about one of my early mistakes. You want to hear about my first wife? Oh my god, what a mistake that was! For God's sake! I've made plenty of mistakes in my life. SD: But in order to do that, when you make money, you have to make a lot of money. If you're going to have situations where you're going to have significant losses on things where your timing's off, even if you get the eventual trade wrong. It does mean that on your good calls, you've got to make a lot of money. Some people have said, and I know a guy very much like this. He's wrong 50% of the time, he's right 50% of the time. And he makes so much more when he's right than he loses when he's wrong, he's a very profitable trader. And that's the other thing, is when do you get out? Because on a big call, like for example, when you went bullish on commodities in the latter part of the last years of the 20th century, that was a long cycle. But it eventually ended. How do you know-- if you've got something that you still feel is right, and there's a long-term potential, how do you protect your profits when the cycle eventually charts? JR: Well, my view, my problem, my strength, is I don't like to sell. I like to own things. The kinds of things I buy, often, you can own forever, or at least for many, many years. And since I'm lazy, and I don't like to have to work too hard, but selling takes-- it takes much work to sell, almost as much work to sell as it does to buy something, if you want to do it right. And since I'm lazy, I prefer to own things for a long, long time. I own China, which you've mentioned before. I have never sold-- well, I think I'm selling one today. But I basically just don't want to sell my Chinese shares. I've started buying China in 1999. I've never sold any Chinese share, except the one that I-- I think I'm selling one today. My plan is that my kids will own these Chinese shares someday. You know if I had sold America in 1917, I might have looked smart for a while, but 50 years later, 70 years later I would have been a damn fool to have sold America in 1917. So what I hope is that my girls wake up one day and say, he must have been a smart old guy. Look at all these Chinese shares we have. And now we're really, really, really rich. Since I'm lazy I prefer to find things like that. I own Russia at the moment, which by the way has done amazingly well for-- I'm really bad at timing, but this one I got reasonably well. I don't see any reason to ever to sell Russia unless and until something dramatic happens. It was so cheap when I bought it, and the changes that are taking place in Russia are so dramatic, as far as I'm concerned, that if I've got this right, my kids are going to wake up and say, look at all these Chinese and look at all these Russian shares, and they'll be really rich. That's my plan. That's my way to do things. Now sometimes, especially on the short side, I get forced out. You have to on the short side. But on the long side, unless I find that I've done something dramatically wrong, I'll just stay with it for a while. Now that's not being a very efficient and great investor, the smart guys. But see, I don't have any clients. If I had clients, I would be like your friend that you described earlier-- who was it, GMO? SD: Yeah. JR: Since I don't have any clients, nobody is calling me up saying God damn, what a fool you are. How could you buy this stock? It's down 18% or whatever. Nobody knows except me, nobody cares except me. My kids certainly don't care. And that's the only client I have. And they're too young to know. So I'm lazy. Sometimes I do get forced out. Yes, of course I have to. But for the most part no, I stay with them. SD: And investors do seem to be becoming more short-term, despite the fact that everything we know tells us that finding good people and backing them for the long-term is the most successful thing you can do. Investors seem to be becoming more and more influenced by very short-term records. And that's one of the things that's savaging the mutual fund industry right now. One of the things that I wanted to touch on is this ETF phenomena. I mean, it's probably the equivalent of the Nifty Fifty of the day, which is buy everything in its weight, don't do any research. Don't take any views. Don't even take a view on a manager let alone a stock, but just own a basket. And a lot of people feel great disquiet about this. I think your commodity index has a few ETFs on it, does it? So perhaps you're not the guy to ask if you're in the ETF industry. JR: No, no, no, I certainly see what's happening in ETFs. I mean I pay enough attention to know what's going on. First of all, ETFs are very efficient, very easy, very simple. There's no question about that. Therein lies part of the problem, of course, with ETFs is that they are easy, simple, et cetera and that makes it easy for somebody to say oh, I want to buy Germany, buy the German ETF, and don't even look to see what's in the German ETF or whether it's a good ETF to own. And maybe it should be a terrible ETF, but nobody looks anymore. So there are excesses developing in the ETF business. There's no question about that. But don't worry Steve, we're going to have a bear market. And when we have the bear market, a lot of people are going to find that, oh my God, I own an ETF and they collapsed. It went down more than anything else. And the reason it will go down more than anything else is because that's what everybody owns. The stocks that aren't in the ETF will go down, but they're not going to go down nearly as much as the stocks in the ETF because everybody owns the stocks in the ETF and they all have to dump. And so those stocks will go down the most. SD: Liquidity is a two-sided sword. JR: Well, yes. SD: If liquidity is entering-- JR: It's easy and simple and wonderful. And when you find out that easy, simple, wonderful investing loses you money and will lose you more money, then you'll change your mind. I don't know if you remember because you were probably-- but in 1987 there was something called portfolio insurance. SD: I do remember it. It was one of my first years in the industry. Leland, O'Brien, Rubenstein came up with this great idea. JR: Fabulous-- portfolio insurance, you didn't ever have to worry again as long as you lived. Well portfolio insurance caused the whole thing to fall apart and collapse because it was simple, easy, and wonderful, whatever the words I used before. Well then we all realized that since everybody was doing it, and when it had to reverse, that meant those stocks collapsed more than anything else and the stock market went down 20% in one day because of portfolio insurance. It was my birthday. It was the best birthday I ever had in my life. You're exactly right, it was wonderful. I couldn't believe it because I had been short the whole summer and stocks keep going up. And then all of a sudden I couldn't believe how much money I made. SD: I entered the industry in the summer of 1986. So for me October '87 was a real introduction into how savage and rapid a bear market can be. One of the things that when you looked at what happened, of course. JR: By the way, that wasn't really a bear market. If you look back at the charts-- SD: No, no, no. JR: If you look back at the charts-- you and I remember, and anybody who was there remembers. But if you look back at the charts of the '80s and '90s, that barely shows up. SD: And I think if you'd bought stocks on January 1 and taken the rest of the year off to sail around the world, you came back on January the 1st the following year, it was pretty much back where we were. JR: Yeah, you still were-- exactly. That's what I mean. It wasn't a bear market if you were there. It was a terrible, devastating, horrible experience. But basically you look back and it doesn't even show up. SD: But at the time, in the postmortem on portfolio insurance-- and maybe there is a lesson for us in there-- it's the mechanical nature of portfolio insurance that seemed to have done so much damage, which is that once it started selling, the nature of by causing its own volatility, it pushed lower, which therefore required the model to sell more futures in order to-- JR: Isn't that going to be the case with ETFs when you and I who own ETFs start selling our ETFs and everybody starts selling their ETFs? The ETFs will go down, and that means that companies in the ETFs are going to go down a lot, because everybody's getting out. SD: Could be indiscriminate. JR: Yeah, it has to be. SD: The model tells you to sell everything. JR: You don't have any choice. If you're running an ETF and everything is being liquidated from your ETF, you have to sell, whether you like it or not. As I say, they're wonderful. They're simple. They're easy. It's magnificent how easy they are. But therein lies the problem. And many people are going to find in the next bear market that their ETFs go down more than their other stocks, because the other stocks are not in the ETFs. Now there's a magnificent opportunity for somebody. I'm too lazy. But if somebody can just take the time to focus on the stocks that are not in the ETFs, there must be fabulous opportunities in those stocks because they're ignored. And some of them have got to be doing very, very well. And nobody's buying them because only the ETFs buy stocks. You look at the Japanese market for instance, the Central Bank of Japan has bought up all the stocks in all the ETFs. The ones that they're not bothering with are just sitting there. SD: Yeah, it's an extraordinary thing that QE in Japan has ended up actually buying ETFs. And even perhaps more extraordinary, they're buying Nikkei ETFs, which is one the most poorly constructed indices known to man. JR: That's what I said before. Most people don't even look to see what's in the ETF. There are plenty of very badly constructed ETFs, but nobody knows what's in them because it's so easy to pick up the phone and say, buy the Japanese ETF. They don't care what's in it. They don't know and they're not going to find out until-- they're going to find out eventually when it's too late. By the way, the Swiss National Bank is doing the same thing. I mean the Swiss franc, when I was a kid, the Swiss franc was backed by gold-- no debt and lots of gold. Now the Swiss bank is backed by Amazon and Google and it's in American FANG stocks. They have staggering amounts of these stocks. And that's what backs the Swiss franc now. SD: Yeah, it's an extraordinary situation for a country that's traditionally prided itself on financial prudence that the national bank is doing this. JR: More than prudence, they've backed themselves on strength, and even you had to own a lot of gold. When I was a kid, if you went to a Swiss bank the first thing they did was put you at least 5% in gold, maybe 10% in gold, and then what else do you want? That's where they started. And the Swiss National Bank, the same way. I know. I mean, I have some Swiss francs sort of by accident, and I worry about them all the time. It's not enough for me to spend too much time worrying about. but I realize the Swiss franc, when it caves, when the bear market comes, is going to be a horrendous investment, just like the ETFs, because there are all these people who buy them. Same with the Swiss franc. What could go wrong? Like Japan, what could go wrong? I own Japan by the way. We're going to find out what can go wrong. I own Japanese ETFs as a matter of fact. And the reason I own them is because I know the Japanese central bank is buying. And I know all the Japanese brokers are buying them. Don't think I have some great insight here. I'm just telling you. SD: And that's going to work until it stops. JR: Until it stops. And it may have stopped yesterday for all I know. I don't think so. I'm not selling. But I suspect that-- I know the Japanese market is going to have a gigantic collapse down the road. Whether it's next year or the year after I don't know. Everything works until it works. But even though I'm being a little bit of a greater fool by owning Japanese ETFs, it's because I know that's what everybody else is doing. SD: When you say you know that there's a collapse coming in Japan, is that because you think it's going to be a global phenomenon and Japan will be part of it, or there's specific reasons to be long-term bearish about Japan? JR: Steve, in America as you know, we've had bear markets every few years. SD: We used to. JR: Well done. And Janet Yellen will tell you we're never going to have a bear market again because she's smarter than we are, she's smarter than the markets, and the central bank has things under control now. She publicly stated this. Do not worry. We will not have financial calamities again. Head of the central bank in America has said that out loud officially, Mrs. Yellen-- yeah, Mrs. Yellen. I happen to have a different view. Now if you believe the American central bank, you shouldn't be talking to me at all. But we've had, we used to have bear markets every several years. We always, always since the beginning of the republic. In my view we will have them again. And the next one is going to be horrendous, the worst-- you came in the business in '86. It will be the worst in your lifetime, in your financial experience. And the reason, in 2008 we had a bear market because of too much debt, staggering amounts of debt. Steve, since 2008 the debt has gone through the roof. Every country in the world talks about austerity. Nobody has reduced their debt in the last few years. Everybody has increased their debt in the last few years. And so the next time we have a bear market, it's going to be horrendous because of this. Even China-- in 2008, the Chinese had a lot of money saved for a rainy day. It started raining in Singapore. They had a lot of money saved for a rainy day. It started raining. They started spending and helped save the world. But even China has a lot of debt now. So China is not going to be able to do for us what they did the last time around. Maybe the American central bank will be able to print more money, maybe the Japanese and the Germans and others. But no, the next time around, it's going to be very, very bad. Now I want to say again Mrs. Yellen, the head of the American, the most important central bank in the world, says it's not going ever going to happen again. SD: Well I remember, because we were running this long volatility fund here in Singapore that in 2006 and '07, we received papers coming out of the Bank of International Settlements saying that financial innovation and derivative products have ensured that there would never be excessive volatility in the markets again because financial innovation will ensure that those best able to cope with the volatility now owned it so it wouldn't happen anymore. And now we've got a situation where clearly the gross level of debt is higher. But the argument is it's all in places that are better able to cope with it, and that banking regulations meant banks are much less risky. So the channels, the mechanism of these channels that's going to cause this level of destabilization won't happen as rapidly or at all again. I mean, you're obviously somewhat skeptical about that about thatJR: Well, I say hallelujah. I hope it's true. I'm sure I'm going to go broke because somewhere along the line I'm going to short everything saying this cannot last. And I'll go bankrupt and Mrs. Yellen will be the richest person you know. And I'll be the poorest person you know. SD: I want to turn to a few specific sectors now rather than the general outlook of the world. It's clear that you're very concerned about that, though not so concerned that you want to actually be fighting it with aggressive shorts right now. One thing that you've spoken about in the past and one thing that we are exposed to is agriculture. It's an area that's generating quite a lot of comment. But from our experience, very few people have actually done anything about it. Very few pension funds, very few individuals have exposure to it. It's hard to get through the stock market. There are very few agriculture companies, certainly on land-owning companies. You can get exposure through the food industry. But you became very positive about the agriculture a while ago. Where are you know on that? JR: I'm extremely bullish on agriculture. That hasn't made me any money yet. Well it has a little bit because one of my largest shareholdings-- a large-- well, it's not one of my largest, but I am a director of a Russian fertilizer company which is making all-time highs or near all-time highs, which is pretty astonishing given that it's Russia and everybody hates Russia, as you well know. In fact I'm startled that all of my Russian stocks making all-time highs. And this is a hated market. So it's something I have learned. If you buy something that's hated, chances are you're going to make a lot of money down the road. SD: Is this potash? JR: No, this is called PhosAgro. It's phosphorous. It's one of the largest phosphorus companies in the world. But Aeroflot-- I own shares of the Moscow Stock Exchange, the home of Lenin, Stalin. Mr. Lenin must be turning over in his grave because the shelves of the Moscow Stock Exchange are at all-time highs. Poor Lenin-- poor Lenin. But back to agriculture-- prices are still not up. Prices are still down, for a variety of reasons. I mean agriculture has been a disaster for 35 years, as you probably know. I have an agricultural index of agriculture prices. It's down, what, 30%, 35% over the past 20 years. Now there's not much in life where the prices are down 20% over the past 20 years, much less over the past 30 years. So agriculture is a disaster. And often throughout history if you find things that are disasters and you buy them, you may lose money first or you may go bankrupt first, but usually you make a lot of money in the end. It's not the first time we've had big cycles in agriculture, in real assets, and probably not be the last time either. SD: Is there a convenient way for a smaller investors to play this theme? JR: Well for me I buy the Rogers Agricultural ETN. It's on the New York Stock Exchange, very, very simple to do. That's what I do because I'm too lazy to buy futures anymore. SD: Well it's got your name on it. It's the least you could do I think. JR: Well yeah, I happen to know it's the best constructed index for commodities. So that's why I do it. But agriculture, back to the point, it's horrendous. It's a nightmare, except Russia by the way. Russia right now, agriculture is booming because America put sanctions and Europe put sanctions on Russia. So Russian agriculture is booming because America has said we're going to hurt the Russians badly. We're going to put sanctions on them. So they did. You couldn't sell food to the Russians. The Russians said we won't buy food from the West. So now the Russian agriculture is booming. And if you ever read any Russian history or novels, you know that historically there have been times when agriculture has been big, big, big in Russia. It is again. I mean America shot-- the West I should say shot itself in the foot because now they've developed this huge booming, thriving industry in Russia. And if they continue the sanctions, I don't know, in three or four years Russia is all going to be embedded. They're going to have the capital. They're going to have the expertise. They're going to have everything they need to be a major agriculture player, which is not going to be good for Europe or for America. SD: Well they've certainly got the land. And I think you can still legally own land as a foreigner in Russia, which is kind of surprising to most people. JR: You can, although I think maybe each area it may vary. I don't know. I don't own land. I'm too lazy to own land. I am a director of the fertilizer company and I've just recently become a director of a farm, 155,000 hectares, a big, big farm in Russia, because it's all happening. Somebody should call the State Department and say don't you know what you're doing? You're building a gigantic competitor. And all of those people voted for Trump by the way. The farm states all voted for Trump. SD: Yeah, sure. JR: And now they're building this gigantic competitor for American agriculture. SD: But what about corporate governance? I mean we've been invested in Russia for 25 years, sometimes successfully, sometimes unsuccessfully. The corporate governance problems we have encountered during that period have meant that some of what ought to have been good investments-- you've had companies that have had good outcomes. But the corporate governance has been so poor that the investors themselves have done badly. JR: Well I haven't had that problem yet because I guess I don't have the same ones you do. I read about problems like that. I mean, Russia's only been capitalist for a few years, as you know. And even then they were crooked capitalists, as you know. I was bearish on Russia for 48 years, 49 years. SD: And that's very clear from your book-- JR; Oh yeah. SD: --the Investment Biker, if people-- JR: I've always badmouthed Russia for decades-- decades. But then I've seen, I think, something change in the Kremlin. They now realize they cannot play those corporate governance games, or call them what you will, and that something is changing I should say, hasn't changed overnight. And if I'm right, then Russia is going to be great for-- Mr. Putin has changed somehow. The people in the Kremlin have changed somehow. This is not Switzerland. This is not the Netherlands, by any stretch of the imagination. But it is changing. SD: We've been exposed to some agricultural companies in the Ukraine, which have not done well for us. And that's perhaps not surprising given what's happened in the Ukraine, which was traditionally the breadbasket of -. JR: Of the world. SD: And for all I know, they're still producing grain there. But certainly the investors have not seen any of the proceeds. JR: Well Steve, I said before I was bearish. I first went to the Soviet Union, including Kiev, in 1966, and came away saying this is never going to work. I've turned bullish on Russia. I have not turned bullish on Ukraine. That place has been so badly managed for centuries- - centuries. I'm not bullish on Ukraine because they still don't know how to run a country. They don't know how to run anything. So there are some places-- Belorussia I haven't turned bullish on. I'm turning bullish on Kazakhstan. Some parts of the former Soviet Union I'm still negative on. It's only the Kremlin, the Moscow Kremlin where I see things changing. You go to Kiev, Kiev's a nice place. Ukraine's a nice place. But I'll leave that to you. SD: It's certainly very affordable right now. JR: Yes, it may get more affordable. SD: Can I move on to another area, which I know Real Vision viewers have been traditionally very enthusiastic about, and it's something you've commented frequently, which is gold. You mentioned the Swiss bank used to own it. Now they seem to prefer ETFs. JR: They prefer Amazon. SD: Where do you stand on gold right now? I mean it's had a decent short-term run. We're at an 11 month high. JR: I own gold. I've owned gold for many, many years. I've never sold any gold. I haven't bought any serious gold since 2010. I still periodically buy it to give as gifts and things, but I'm not selling my gold. Before this is over, gold is going to turn into perhaps a bubble. It's certainly going to get very, very, very overpriced. I'm not buying it now. Well, I mean, if war's about to break out, of course, I'll buy it. And I'll buy it high and be happy to get it. But I don't expect that. But short of war, I expect another opportunity to buy gold and silver. And if it happens, I hope I'm smart enough to buy a lot. Because the next time, when the serious problems come next time, a lot of people are going to lose a lot of confidence in paper money and in governments. And throughout history when that happens, people put their money in gold and silver. Whether they should or not's irrelevant. They always have. And I don't think mankind has changed enough yet that that's going to stop. SD: You've commented a couple times that entry levels are incredibly important. You like to enter when something's totally hated. Gold got pretty hated about 18 months ago, had a decent recovery but nothing like enough to make it – you want to redeemJR: Steve, Steve, there are a lot of people still who think that gold is holy, it can never go down, and that gold is holy. Now, when those guys give up on gold, that's when it's hated. When you see in the press that guys say, I am never going to buy gold again as long as I live, she lied to me. She cheated me. She's filthy. She's hopeless. That's when gold is really hated. It may not get there. It may not get there for decades. But that's the time to buy gold again. And I expect we are going to have a time like that before this is over. If that happens, I hope I'm smart enough to buy a lot of gold-- a lot. SD: Because the problem we've had in the past with gold, if you look at, say, 2008, it wasn't a good investment. It went bad with everything else. It's liquidity-- JR: I know. That what I'm saying. SD: --swamped everything else. JR: That's why I suspect that there's going to be another opportunity to buy gold. And the next time there's a lot of turmoil for a while, people are just going to be throwing everything out the window, nearly everything out the window, including gold. And the holy men, the mystics-- the mystics will have to sell their gold too. And I hope I'm still solvent. And if I am, I hope I can buy a lot of gold. SD: Right. And what's your preferred way of doing that? There's a lot of debate about whether you actually want to have the physical stuff. If you do, whether you want it in coins or bars or whether you want to hold it in your own vault or-- JR: Well, I can give me my view of it. Everybody should have coins, physical coins, as an insurance policy, as an emergency, if nothing else. You hope you never need them. But you've got to start by owning gold coins, coins that are recognized all over the world. If you start buying rare, exotic coins, you may have a problem. Because you go down to the shop, he's going to say, what's that? But if you go down to the-- SD: I recall cool story where you were tracking down some North Korean gold coins? JR: I did, in fact. I did. A few years ago, I bought some North Korean gold coins, 13 to be exact, at a coin fair here in Singapore. Yeah, my view is that as far as I know, they're impossible to get now. They were very difficult to get at all at any price. And I don't know why that is, but my view is that North Korea's going to disappear. And when North Korea disappears, you're going to have a great collector's-- first of all, your downside is the price of gold because you can always melt them down. They won't go below the price of gold. And if I'm right, North Korea disappears. Then they're going to have great collector's value. SD: Right. JR: And so, yeah, if you're looking for some-- if you can find any Korea Korean gold and silver coins, you might think about buying them. SD: Possibly the only North Korean investment that's looking promising right now. JR: Yes. I'm an American, so it's impossible for me, especially now, to invest in anything in North Korea. I guess you could still find stamps maybe and invest in North Korean stamps. But, no-- I mean, there are Americans who invest in North Korea, by the way. And there are foreigners and Europeans and Singaporeans who invest in North Korea, but not me just because I'm lazy and I have not found a legal way to do it. But it is going to disappear in a few years, in my view-- in a few weeks, if Mr. Trump blows it up this year. Then it would disappear quickly. And once it disappears, Korea's going to be a very, very, very exciting place to invest. You should put Korea-- SD: In the short term, that could be a catalyst for some actual volatility, which we've had very little sign of. JR: Yes, if war breaks out, which I don't think is going to happen, although Mr. Trump's sometimes spontaneous, to use that word. If war breaks out, it's certainly not going to be good for any of us, certainly not good for any financial markets, except maybe on the short- - it'll be good on the short side for everybody if war breaks out. I don't expect it to happen. The Chinese have told them, OK, if North Korea starts a war, we will not come to their aid. We will not help them if they start it. But if you start it, if you, America, starts a war, then we have to defend North Korea. Now, I hope Mr. Trump has gotten that message because it's a very important message. And I hope the kid has the message too. Because without China helping him, he cannot-- it's suicide if he starts a war. And maybe he wants to commit suicide, but I doubt that. And likewise the South Koreans have said, we're not going to play. We don't want a war. You want a war, Mr. Trump, you-- now, that's not very practical. Because if North Korea and America are at war with each other, you look at a map. South Korea's pretty involved, whether they like to or not. But I don't expect the war, unless there's some kind of a accident, let's put it that way. But if it happens quickly, North Korea will disappear. And then you should buy all the North Korean coins you can. SD: Going back to gold, so gold coins-- JR: Gold coins are the best way. And you should have physical possession of some gold coins. After that, gold futures are the best way if you want to make money and you're a good trader. Gold futures, that's where you can get the most leverage of any, unless you can find the right gold mine. But there are hundreds of gold mines. If you're smart enough and have the time to find the right two or three gold mines, then, yeah, then you'll make huge amounts of money in the right to-- but, you know, there are hundreds of gold mines. SD: Yes, it's very difficult to find the right gold mine. JR: Right. SD: Mark Twain's famous observation was a gold mine is a hole in the ground with a liar- - JR: --with a liar up at the top, right. And he's right I was going to use that exact-- so if you find the right gold mine, do it. But otherwise, have some gold coins in your closet or in your safety deposit box or both. And then learn about gold futures because that's the way to make a lot. But then you've got to get the timing and everything else right. So I'm not very good at that. SD: So constructive on agriculture and-- JR: --waiting on gold. SD: --waiting on gold. JR: Today I'd rather buy agriculture than gold if I had to buy one or the other. SD: What about other commodities? We've seen a decent up cycle now-- JR: Well-- SD: --after a fairly vicious down one. JR: Oil is in the process of making a complicated bottom, if you ask me. Whether the bottom is at next year at 36 or-- I have no idea. I'm very bad at that. But I know we're making-- in a few months maybe, we're going to look back and say that in 2015, 2016, 2017, gold made its bottom. And then things are going to be great. The known reserves of oil are in decline. SD: You don't subscribe to this view, which some of our futurists do, that it's going to go way of whale oil? It's going to become obsolete-- JR: May well. SD: --and be useless and valueless? JR: May well. But that's not going to happen in my lifetime. It may well happen. But there was a lot of money made in whale oil before it all disappeared. So these things don't happen overnight. And maybe oil is going to disappear, but it's not going to happen certainly not in my lifetime and probably not in your lifetime. SD: Right. And anything else that looks interesting in the commodity space? JR: Well, Kazakhstan is a major commodity producer, Nigeria. These are places that probably are going through dramatic secular changes, been disasters for decades, centuries. There's positive change taking place. I have no investments in either at the moment, but they're places on my list where you probably will find good opportunities. SD: Mongolia's a horrible bear market. JR: Yes. Mongolia's not on my list. I have not seen, and there may be there, I'm just-- I'm lazy. I'm not seeing the positive secular changes that I do see in governance in places like Kazakhstan, believe it or not, and Nigeria, believe it or not. I mean Nigeria's been such a horribly run country for forever, so has Kazakhstan. But I think I see positive changes taking place. I don't see those changes in Mongolia. They may be taking place. But I don't see them. Vietnam would be a better place to look, in my view, than Mongolia. And again, that may be out of my own ignorance. SD: But Nigeria, Kazakhstan, and Vietnam are all much bigger countries in terms of population. Does that play a part in your assessment? JR: They are, but they're not big in terms of size. It's amazing how big Mongolia is with three million people. I mean, it's the size of Western Europe or something, and it only has three million people. Yeah, but three million people is not necessarily a negative if there are right reasons to invest there. You can invest in small countries and make a lot of money if things are right. Singapore-- Singapore has five million people. But it's not smaller than Mongolia. So that doesn't matter so much to me, the conditions, the circumstances, the changes. You find something cheap where there's change taking place, you can make a lot of money, whether it's 3 billion or 300 million people. SD: Right. JR: I was trying to think. Oh, graphene is something we should all know about. You ask about overlooked or unnoticed things. You know what graphene is? SD: It's a form of carbon, yeah? JR: Yes. Graphene did not exist 15 years ago and then some guys at the University of Manchester were messing around in a lab, and they produced just-- scotch tape, believe it or not, on carbon, graphene. And they won a Nobel Prize in chemistry for scotch tape. SD: It has some very particular properties, which are highly unusual JR: It is. It is thinner than paper, stronger than steel, et cetera, et cetera. I mean, scientists, not me, scientists say it's going to be as important as the internet down the road. If that's true, we should all know about graphene. There are companies in the process of-- I think there are a couple of public companies-- I don't own them-- that are in the graphene business. But it's like many of these things, you have to be worried about the reality. Like cybercurrencies, you have to be worried about the reality rather than the hype. But graphene-- I think graphene has a better future than cybercurrencies-- SD: Right. JR: --for instance, so please learn about graphene. SD: Well, there's been plenty of commentary on cryptocurrencies or cybercurrencies on RealVision and in the mainstream. We're trading them. it's an extraordinary financial experiment. If you're a libertarian, I guess you mind find it inspiring that this has happened with absolutely no regulation. But where do we go with these things? Are you a true believer? JR: Well, Steve-- SD: Are you an enormous skeptic? JR: I don't own one, nor am I short one. So I am neutral in that sense. I do know that there are over 2,000 now in just a few years. And anything that booms like that usually has a reason-- there's reason for skepticism. You do know that some of them are already zero. I think the Wall Street Journal had an article yesterday maybe that 30% of the ones that have been launched in the last year or two are at zero because they have not traded. Now, there are some that have been skyrocketing. They've gone up 30 or 40, 100 times. So if you own the ones that have gone up 30 times, you think these are wonderful. If you own the ones that have gone to zero-- or some have already gone bankrupt. Somebody offered me a lot of them recently. And while I was doing my homework, it turned out to be a sham, a fraud. Fortunately, I was doing my homework so I never got around to taking them. There's no question that the world has money problems. There's no question that all of our lives are being changed by the internet. My kids will never go to a bank when they're adults. My kids will never go to a post office. They may rarely go to a doctor when they're adults because everything. And so money's going to change on the internet too. Which one? I don't know. You've heard of IBM in the computer business? IBM did not invent computers. The company that invented computers you never heard of, likewise automobile. I mean, there were hundreds of automobile companies 100 years ago. There are only 25 now. SD: This is one of the profound mistakes that investors make again and again and again. I experienced it quite up close and personal during the internet boom when I was working for a company called Lehman Brothers in the capital markets area. Investors got it half right, which is this phenomena, in this case the internet, is going to change everything. And indeed, that's proved to be profoundly true. Therefore everyone involved in it is going to make a fortune, profoundly untrue. In fact, you could well argue that one of the most deflationary forces we've had the last 20 years has been the internet. It's probably been better at destroying businesses than making them. It's certainly not everyone. In fact, very few whose - Only a tiny number ended up dominating it. And I think we may be going through the same thing again with whether it's cryptocurrencies or we're seeing it in biotech, which is an area we're invested in. Just because something's changing rapidly and significantly, doesn't mean that everyone who's involved in this in some way is going to make a fortune. It's probably true there'll be more value destruction that there'll be value creation. And you can have this conversation again and again and again, but it doesn't seem to make any difference. The hype, the hope, and the optimism, and, of course, the momentum of upward prices just seems to suck an awful lot of people in. And that's what we're seeing, I think, now in these cryptocurrencies. One of the things that was emphasized to me again and again, the reason why this thing will be, this bitcoin thing will be so valuable is unlike the massive money printed in the central banks of fiat currencies, this thing's gotten very restrictive, naturally restricted supply. Takes incredibly difficult to produce another bitcoin. And I was like, OK, that's interesting. I didn't do enough work on it. I'm not exposed to it. But as you say, what hasn't been contained is whilst the number of bitcoins may be naturally constricted, the number of other cryptocurrencies is not. So it doesn't really matter if you've got one constrained currency, if you've then got another 2,000 at infinite supply of alternatives. So at some point, that's going to cause significant disruption, one assumes. JR: Well, I just said to you that everything is going to be on the internet and that the internet's going to change everything we know about, including money. And so the solution to our money problems is going to be on the internet. Who has that solution? I'm not smart enough to know yet. I told you IBM did not invent the computer. So being first is not necessarily the best way to go going forward. Governments don't like things they cannot control. And governments may well make it illegal to use any kind of cryptocurrency. Now, I know that the cryptocurrency people say, that's OK. That's good for us because then we can get around. That's our strength. We don't need the government. Well I don't want to take on the governments, the world governments. The Chinese have just made it illegal to use cryptocurrencies or to sell cryptocurrencies in China. And China's been a huge source of demand in recent months. SD: We think it's over 50% of the trading, as well. JR: Well, China said, trading is now zero in China as of today. So that's a factor. But also, remember, it's all on the computer. And if something ever happens to the computer, to the internet, whether it be a war, a storms, or government fiat, or whatever, what do you do then? At least with my gold coins I can go down to the market and try to do something. I can't go down to the market and say, on my computer I have a lot of cryptocurrencies. And the guy says, turn it on and show me, and there's no computer. He's going to say, I'm sorry, Mr. Rogers. I can't sell you any bread. I'm sure that your computer has a lot of cryptocurrencies. But I got to have more than that to sell you this bread. SD: Yeah, in a situation of stress, we can assume that these things will do very badly. JR: Well, I don't know. Maybe I'm wrong. And then certainly the bulls say I'm wrong, that that cannot happen because of the inherent strengths of cryptocurrencies. And maybe they're right, and maybe I missed another one. It's OK. I've missed a lot of investments in my life. SD: Yeah, it's a very tricky one to believe in. You hold a gold. You can sense its value. I've never really sensed that through my-- through our bitcoin trading. JR: Well, maybe you're missing it, too. Maybe you and I are both missing it. SD: Maybe we're both too old. JR: Maybe what you need to do is start minting bitcoins. Maybe that's the solution. SD: There's an industry like that too. I think there was some bitcoin miners in China that are most enormous industrial operations. JR: Not anymore. SD: The biggest constraint-- JR: Not anymore. SD: The biggest constraint they had was the price of electricity. But-- JR: Right now, as of today, the Chinese have said, you guys are out of business. SD: Well, there's certainly-- and regulation will most certainly come. And I guess that that will be the critical point in the evolution of these things. JR: Well, my thought about this, and it's useless because I don't own any, but that when the collapse comes-- and there's always a collapse, no matter what the new industry is. When the collapse comes, that will be the time to start investing in, if you can figure out which ones and how to do it, that will be the time. There's was always a collapse. I mean, railroads were gigantic-- gigantic-- bull market once upon a time. And they collapsed, totally collapsed. Railroads are still around, and you would have made a lot of money if you had picked the right time. Radio-- Radio Corporation of America was a staggering stock in 1929. Well, it collapsed. Well, RCA, it's not there now, but it's part of- - I guess NBC owns them now. All these things survive. And if you are around when the collapse comes and you're clever enough, you'll probably make a lot of money. But buying during the bubble or even the over-extension has rarely been a way to make a lot of money in anything. SD: Well, it's a bull market to dwarf all others, if you look at some of the-- where the prices have gone. I'm cognizant that we have taken up a lot of your time. Is there anything-- if you were to sell up you know -- we spoke about a lot of things that we need to be concerned about in the global financial world. And we're not alone in being disquieted by it. Is this something that you think that is very important that people are missing about that they should be worried about? Or is it just a question of the fact that there are things out there that clearly ought to be worried about, but people are choosing not to worry about? JR: Well, as you know-- I assume you know because you're in the markets. There is a lot of complacency now. There is a lot of confidence. You say they're a lot of bears, and maybe they are. But maybe the bears are just the ones who watch you instead of us. When I see the press-- I don't have a TV, so I don't watch those guys. But I don't see much skepticism. I don't see much worry. Janet Yellen, the head of the Central Bank in America, said, it's OK. You don't have to worry anymore. Other central banks that we've talked about-- the Japanese central bank, the Swiss central bank. These were central banks that even 20 years ago were the soul of propriety. I mean, there was nothing more solid than the Swiss central bank or even the Japanese central bank. I mean, these guys are out there. We've talked about that the Swiss franc is now backed by Amazon. The yen is now backed by Toyota or Japanese ETFs. These are very, very serious developments, at least in my view. Maybe I'm wrong. Yellen says I'm wrong. So people need to be extreme. They need to be knowledgeable first of all. Don't listen to me, because I'm just some guy on the internet. But if they get knowledgeable, I think they might get worried. And if they get worried, they'll start figuring out ways to protect themselves. You and I have discussed some ways to protect ourselves. I would not own bonds anywhere. Well, I own Russian government bonds in rubles, but short term because they have such high yields and I'm optimistic about Russia, as we've discussed. I think there are great opportunities there. But people should be very, very worried about bonds nearly everywhere in the world. They should be worried about stocks nearly everywhere in the world. I mean, these are going to be very perilous times if I'm right, and when that happens, some of us are not going to survive. I hope I'm one that survives. I hope I get it right enough to make it through this. If you look around this room, you see a lot of silver. I just noticed there's a lot of silver here. I do think that precious metals will get us through. I own a lot of US dollars which I expect to get very overpriced in the turmoil which comes. People will look for a safe haven. They always have. They think the US dollar is a safe haven. It's not. America's the largest debtor nation in the history of the world. But people will flee to a safe haven. It will get overpriced, might even turn into a bubble, at which point I hope I'm smart enough to sell. What do I do then? Maybe gold. If it works the way it often has, if the dollar gets very strong, gold gets weak. If it works that way, then it would be a good trade to sell my dollars and buy gold. By then the renminbi might be convertible. If the renminbi's convertible, maybe I'll sell my dollars and buy renminbi because if the dollar gets as strong as it probably will, everything will go down. Nearly all currencies will go down against the US dollar, at which point if I sell my dollars, I've got to figure out what to do. The renminbi, gold, silver, who knows? Cotton. Who knows what will be the asset of choice at that point? Maybe Bitcoins. Maybe they will collapse too. It's not just the Chinese that are coming down hard on cyber currencies now. A lot of people are. And it doesn't matter whether the governments are right or wrong, they can make things very, very difficult for a while. And that will be the time for the clever to figure out which ones to buy and how to participate. Maybe I'll call you-- SD: Well, I don't think I'll be able to help you. JR: --and you can't tell me what to do. SD: I've got a guy working with me who's a lot smarter than me about this. JR: Well-- SD: He's figured out some ways to do things that I would never have worked out. But as you said, it looks like to me to be a young man's game. JR: That's always a very dangerous place to invest. When things are going right, we all need a 26-year-old. There's nothing better than a 26-year-old in a great bull market, especially in a bubble. SD: Because they're fearless. JR: They're fearless. They don't know. It will never end. They will tell you why it will never end. They know that it cannot end and will never end. So in the bull market, you've got to have a 26-year-old. But when they end, you don't want the 26-year-old around. I had a former student once who made 500%-- in the late '90s, 500% two years in a row. They loved him. The next year he lost everything for this company. They didn't love him anymore. He was a 28-yearold. SD: I think you have something against guys in their 20s because the first time I became aware of you as an investor was a Barron's article written in the summer of 1987, and it's a very impressive article. I was very young on Wall Street. And there was this guy, Jim Rogers, and they said, what do are you bearish on, Jim? And you said, the world. There are all these 20-something guys that are thinking that they deserve six figures just because they work on Wall Street and they know how to buy stocks. And three, four months later, you turned out to be absolutely right. But as a 20-something at the time, I thought you were being very unfair on 20-something guys. Now that I'm 53, I share your view of these 20-year-old guys. You've got to stay away from them. JR: Well, but see, you made it. You survived. You're a 26-year-old or 20-year-old who made it and survived, and so it's OK. Many of them don't and don't know why. They make a lot of money. They don't know why they made money. So they don't know why they lose money. They don't know what happened. You, at least, something happened. You're still here. You still have a job. You're still in the investment world. SD: I'm self-employed like you. JR: Right. SD: So I can't find anyone to hire me either. I mean, one of the things about trading is that success is very often just as dangerous as a little bit of failure. Certainly-- when I used to run a trading desk, one of the things that I used to do is I'd take capital back from my least successful trader, but I'd also take it back from my most successful trader. And I used to do that because of this hubristic phenomena. But I did that until I was stopped from doing that by management because they didn't really think that that was smart, and it upset the guys who were-- JR: Successful? SD: --who were being very successful. But I still think it's a very smart thing to do. If you are all of a sudden the hand, it's very hard to look yourself in the mirror and say, I'm not as smart as I think I am. Or, not as smart as I hope I am. I mean, one of the most dangerous things you can have happen-- and your experience in buying these puts underlines that-- is a hot run. I think to a certain extent, people who have got in on Bitcoin early are feeling that because they've made so much money so easily. It's very dangerous. JR: Well, I often speak at universities and other places. And I say them, the most dangerous time is when you've had a great success because you really think you're smart, and you're immediately looking for what's next. I've got to find another one because this is so easy and find me another one. And that's when you should close the windows and go to the beach or do anything to get away because that's when you really, really, really know how smart you are, how easy it is. And it's usually, for most people, a very dangerous time, especially if you're 27. SD: Absolutely. I think that's-- but how do you do it? I mean, is it just wisdom and wisdom can only be really achieved through experience? I mean-- JR: Well-- SD: --how do you avoid it, this level of overconfidence? JR: I'm not as smart as other people, so experience is what taught me. Experience is the fool's best teacher. Well, I guess I was one of the fools. I learned from making plenty of mistakes and know what can and will and does go wrong. I also now have a little bit of judgment based on experience and having seen all this. And I've read about many markets too. Even before I came along, the world's had markets, believe it or not. And I've read about a lot of markets from the 19th century, the 20th century, and the answer, of course, always is, well, that was then. Things are different now. SD: Oh, yes. JR: And you know as well as I do that some of the most dangerous words in the investment world are it's different this time. It's different now. It ain't ever different. It's never different.