by Nick Giambruno, International Man:
Nick Giambruno: You’ve said that many times throughout history, conventional wisdom gets shattered. What are some widely held beliefs that will be shattered in the next 10 years?
Jim Rogers: That’s a very good question. Well, for one thing, I know bond markets are at all-time highs almost in every country in the world. Interest rates have never been so low. Everybody is convinced that bonds are a good thing to invest in. Otherwise, they wouldn’t be at all-time highs.
I’m sure that 10 years from now, we are all going to look back and say, how could people have even been investing in bonds with negative yields? How could that possibly have been happening? But at the moment, everybody assumes it’s okay, and it’s the normal and natural thing to do. Ten years from now, we’re going to look back and say, gosh, how could we ever have done something so foolish?
So one of the things I do is I look to see – when everybody’s convinced that X is correct – I look to see, well maybe X isn’t correct. So when I find unanimity of a view, I look to see, maybe it’s not right. And it usually isn’t right, by the way. I have learned that from experiences and from lots of reading.
Nick Giambruno: How does an investor deal with being accurate but early?
Jim Rogers: Oh, that’s the story of my life. I’ve always been accurate but early.
If I’m convinced something is going to happen or if I should make an investment, I have learned that I should wait for awhile, because maybe it is too early. And it usually is too early.
I try to discipline myself to wait longer or to put in orders below the market and let the market come to me. But even then, sometimes I’m still too early.
Nick Giambruno: How did studying history help you in investing?
Jim Rogers: Well, the main thing it taught me was that everything is always changing.
If you go back and look at before the First World War, nobody could ever have conceived in 1910 that Germany and Britain would be slaughtering millions of people four years later. Yet it happened.
No matter what we think today, no matter what it is, it is not going to be true in 15 years. I assure you. You pick any year in history, and look at what everybody was convinced was correct and then look 15 years later, and you’d be shocked and astonished. Look at 1920, 15 years later. Look at 1930, 15 years later. Any year you want to pick – 1900, 1990, 2000. Pick any year and I assure you, 15 years later everything is going to be different. I guess that’s the first thing I learned from the study of history.
Nick Giambruno: What mistakes do empires always make?
Jim Rogers: They get overextended. They think they’re smarter than everybody else. They think they cannot make mistakes, and even if they are making mistakes they are so powerful they think that they can correct the mistakes. And then they become overextended. Usually they become overextended financially, militarily, geopolitically, in every way.
Nick Giambruno: Is the US repeating those same mistakes?
Jim Rogers: Well, the US is the largest debtor nation in the history of the world now, and the debts are going higher and higher. The people in the US think it doesn’t matter that we’ve got all these debts and there’s no problem. People in the US don’t think that it’s a problem that we’ve got troops in over 100 countries around the world. I mean, when Rome got overextended militarily, it paid the price. Spain and many other countries have had this problem. Maybe it’s not a problem. Maybe America can have troops in 200 countries around the world and it won’t matter, but America has certainly gotten itself overextended in many ways.
Nick Giambruno: Do you think wealth and power will continue to move East?
Jim Rogers: Wealth and power are moving East now, and that is going to continue. That’s because of historic reasons. There’s little doubt in my mind that China is going to be the next great country in the world. Most people are still skeptical of that. Most people know something is happening in China. They don’t really quite understand the full historic significance of what is happening in China including many Chinese.
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