DRIGGS, IDAHO – I heard Jim Rogers speak today…
Jim is an investing legend and someone I’ve looked up to for years. (I’ve met him twice.)
His 1994 book, Investment Biker, is one of my all-time favorite books. (He travels around the world on a motorcycle, discussing macroeconomics. It was a big influence on my own decision, a few years later, to travel and write.)
Anyway, I’ve tracked Jim’s opinions on the markets for years. This week, Jim spoke to Grant Williams and Bill Fleckenstein on The Grant Williams Podcast (the episode is called “The End Game Ep. 11 – Jim Rogers,” and it’s free online)…
What does Jim have to say about the current state of the financial world? More below…
Our Rocky Mountains Winter Home
Greetings from a tiny remote village in the Rocky Mountains…
My family and I are a traveling family. We have no home and no possessions (except what we can carry in our suitcase).
We’ve been around the world – to 30 countries on five continents over two years – but recently, we find ourselves in the Rocky Mountains at the onset of winter, during a pandemic.
For the last six months, we lived in a tent and slept in campgrounds around America. But it’s too cold to sleep outside now. And there’s too much COVID-19 to travel internationally.
So we rented an Airbnb in a little mountain town called Driggs, Idaho. We’re going to spend the winter here, homeschooling the kids and skiing at the nearby Grand Targhee ski resort…
Schoolwork With the Boys
Last night, the boys and I stayed up late watching YouTube videos.
One of the great things about homeschooling is we can include almost anything in our homeschool curriculum and still call it “schoolwork.”
Like jigsaw puzzles. Or board games. Or lessons in cookery. Or western movies. We’ll call almost anything “schoolwork”…
First, we watched videos on economics. The series we watched was called Crash Course. I’d recommend it for parents or grandparents who want to teach elementary school-aged kids about economics.
The boys (ages 12 and 10) loved it and kept asking for more. They seem to really like learning about economics and finance…
Then, we watched a guitar lesson. We have a guitar (which we bought second-hand online). The boys learned two new chords. They seem to really enjoy playing the guitar, too…
Dusty (12) learned two new guitar chords
Our kids have made friends with some other kids who live in our neighborhood. Yesterday after school, they played together in the snow for three hours.
Giving our kids the opportunity to make friends was one of the big reasons we decided to stay put for the winter in a little community. Our kids haven’t had friends in almost three years as we’ve been traveling.
Seeing them play so joyfully with the local kids – nice kids, too – makes Kate and I very happy.
In short, we’re having a great time in our new home in Idaho.
Oh… and the ski hill opens in two days. The kids are so excited about this, they’re almost bursting. And so am I!
State of the World: An Investment Biker’s Perspective
Back to the Jim Rogers interview…
Jim spoke on many of the themes we write about in these Postcards. Let’s break them down… along with my comments…
First, Jim says he’s holding lots of dollars at the moment. He seems to be waiting for a spike in the dollar’s value – or even a dollar bubble – so he can sell his dollars and buy something else. A sort of dollar melt-up scenario…
“I know the dollar will be a disaster,” says Jim, “but at the moment I own a lot of it.”
Here’s what I think…
I’d call monetary conditions at the moment “tight.” Until the Federal Reserve sets deeply negative interest rates, or Congress agrees on a big stimulus package, conditions will stay “tight.”
So the dollar may be supported for a few more months. But eventually they’re going to figure out how to cheapen the dollar and it’s going to fall by a big percentage.
I’d rather just own physical gold than try to time the dollar’s fluctuations…
Next, Jim says crypto money is coming, and governments are going to love being able to track exactly how we spend our money.
But he didn’t seem keen on bitcoin. He says they might ban it, especially if it undermines their efforts to launch their own digital currencies.
As I see it, government digital currencies are coming because government digital currencies will help the feds generate inflation and devalue their currencies.
Remember, the feds love stimulating. It’s the only trick they know.
As for bitcoin, well, who knows? I could be wrong, but it seems like a tulip mania to me. So, like Jim, I’m going to sit this one out…
Jim says Asia is the future. But he’s concerned there’s a war coming between the U.S. and China.
Here’s my take…
China has beaten COVID-19. Its economy is booming and it’s taking over the world.
(According to the International Monetary Fund, China’s share of the world economy will increase by 10% between 2020 and 2021. China is also the world leader in the 5G wireless technology rollout.)
How much longer will the U.S. sit back and let China exploit the dollar and the dollar-based financial system for its own gain?
It could be a while. The U.S. needs good relations with China to keep its economy from imploding…
Jim says bonds all over the world are in a bubble and it’s going to end badly. “Do not put your children in long-term bonds,” he says. Commodities are the only cheap asset class he sees.
Government bonds are a terrible investment. But I wouldn’t short them.
Central banks will “do whatever it takes” to keep interest rates down, including taking rates deeply negative… and printing trillions of currency units and using them to buy government bonds.
Instead, as I’ve written many times in these Postcards, I think falling currencies will be the “relief valve” for all this money-printing and stupidity. My children own gold.
Jim is buying Russian stocks, including a Russian shipping company. He says the Russian stock market is hated and very cheap.
The Russian stock market is down 30% since January. And the Russian ruble is also down 19% this year. Plus, oil and commodities are a big driver of Russia’s economy, and they’re out of favor, too. Maybe I should start researching cheap Russian natural resource stocks?
(I love “max hate” investing. I own shipping stocks already. And I’ve recommended four oil tanker stocks in my paid newsletter, Tom’s Portfolio.)
– Tom Dyson
P.S. Tanker stocks are incredibly cheap right now. And, as far as I know, there’s no other place in the stock market promising to generate such generous cash returns on investment.
If you’re a paid-up Tom’s Portfolio subscriber, read my Tanker Trade report in full here. If you’re not paid-up yet, but you’re interested in getting in on oil tanker stocks before the next boom kicks off, learn more about a subscription right here.
P.P.S. We took Penny to the eye doctor, and they diagnosed her with poor vision. Here she is in her new pair of glasses…
The bitcoin controversy continues, with strong opinions on both sides… including one reader who thinks Tom has a “double standard” when it comes to gold vs. bitcoin…
Reader comment: I had to laugh out loud reading Tom Dyson’s recent comments on bitcoin: “I’d say I was wrong if bitcoin made an all-time high. That would prove that bitcoin is still in a primary bull market. As things are now, bitcoin is in a primary bear market until it tells me otherwise.”
“I’m going to keep denying the sky is blue until… well, until I admit it is blue.” Gold only recently hit an all-time high in USD in 2020, but Mr. Dyson has been saying gold was in a bull market long before it hit that all-time high. Why the double-standard with bitcoin?
I suspect Mr. Dyson already knows he is wrong on bitcoin, but is unwilling or unable to admit as much. No one will need him to admit he was wrong when bitcoin exceeds $20,000 – it will be self-evident.
By the time Mr. Dyson admits he was wrong (if he can do so), his followers will have missed an opportunity to have more than doubled their investment in less than a year. I find that very disappointing for his readers because he has been so vocally opposed to bitcoin, rather than simply noting it was not his cup of tea.
Reader comment: Like the vast majority of your readers, I’ve been loving your Postcards and living vicariously through you all, even though I’ve already been to an awful lot of the places you’ve visited. I just want to weigh in on your “bitcoin is worthless” argument and will take the other side by turning one of your own main reasons against you.
In an October postcard, you said, “bitcoin doesn’t solve any problems in the marketplace that the free market couldn’t solve more efficiently if the government would get out of the way.” But that’s just it, the government will NEVER get out of the way. On the contrary, the government will only continue to increase its intrusion into and attempted control over our lives, including and especially our money.
Bitcoin is the best option I’ve seen in my 71 years and I’m a former CPA. I’ve been studying the Federal Reserve, money, and the markets for 50+ years. Yes, I own bitcoin among my other crypto holdings, as I also worked in IT for 32 years and believe in the benefits of new technology.
Reader comment: Have enjoyed your discussion of bitcoin. I agree with your conclusion, but I come there from a very different angle: The feds have a legal monopoly to print currency. Which is why you and I go to jail if we print dollars in the basement. Now, bitcoin is essentially an alternative currency. No government in the world will voluntarily abandon the monopoly to print money. This is precisely why China is developing a government-backed cryptocurrency, while the U.S. government is asleep at the wheel.
If a cryptocurrency gets accepted in the U.S., it will not be bitcoin, but a government creation. Congress can simply outlaw bitcoin as a violation of the feds’ monopoly. Adopting bitcoin is not a viable alternative, since it would turn the whales (large, current bitcoin holders) into multi-zillionaires. I own a few cryptocurrencies and I am enjoying the ride while it lasts. But I believe the ultimate crash is inevitable.
Meanwhile, others turn to life in the snow… and a sad warning for parents…
Reader comment: Great to see your kids having fun and playing in their “tunnels.” You’ll have to trust me on this one; I grew up a kid in the ’50s living in Quebec City and played in many snow tunnels and caves. I wouldn’t want to count the number of kids who lost their lives to cave-ins (as well as being buried alive) because of having their caves too close to the road and then the snowplow drove by. Just saying. Sandcastles are much safer.
Reader comment: Glad you’re about to become a ski bum. I moved to Sun Valley (actually Ketchum) and skied 100 days a year for 14 years. Do you know where the best snow in America is? Driggs, Idaho. Incredible powder. Enjoy your winter and I’m sure you will return many times, if you don’t stay for a year – or six.
Tom’s note: Thanks for all the thoughtful messages. Your notes keep us going. As always, please keep your questions and comments coming at [email protected], and I’ll do my best to answer them in our Friday mailbag editions.