TDI Podcast: Quantum Leaps with Rogers (#931)

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1:21Jim Rogers:This episode of The Disciplined Investor is sponsored by Horowitz & Company. If you're looking for a portfolio manager, look no further. Horowitz & Company, from seed through harvest, cultivating financial success.

1:40Setting new records, all-time highs against the odds. Meme stocks back with a vengeance. The housing market's slowing, but prices are still rising. And we're talking global markets with famed investor Jim Rogers. All this and much more on episode number 931 of the Disciplined Investor Podcast.

2:18Yeah, the markets are climbing. The war drums are beating. Inflation is whispering instead of warring. Well, welcome to July of 2025. Welcome to 2025. Forget about July. I mean, we thought that there's going to be some tick up in inflation in June. And we saw a little bit of a slowing of the disinflationary trend. Still not here, though, yet, as was suspected that we would start seeing it show up in many of the numbers. There's still some time to see if that actually is true. But right now, it seems that this headline chaos and the continuation of this tariff struggle and our various bills that are passed, the S &P 500, the Nasdaq, keeps on setting new records on the high side.

3:09And the Dow's move has been pretty impressive. But the sell-offs have been shallow. They've been honestly non-existent. Hey, I'm Andrew Horowitz, and thanks for joining me again for another great episode of the Disciplined Investor Podcast. You know, you can listen on YouTube, Amazon, Apple Podcasts, Spotify, iHeartRadio. There's all sorts of places. Wherever there's great podcasts available, whether it's an app or online, you can actually find the Disciplined Investor Podcast. You can also find DH Unplugged where myself and John C. Dvorak spend an hour each and every week talking about the things that make up the markets, the news, really break it down, decipher it, put it back, give you the backdrop, the beyond.

3:58I mean, I hate to be cliche, but, you know, the headlines say one thing, but we go behind that. We really get to the bottom line of what's going on and have a lot of fun doing it too. A lot of fun. We're always joking around about something or other. And we also have listener participation. So if you haven't started listening to DH Unplugged yet, make sure you do so. The recent inflation numbers, right? I guess we could say they remain in line within expectations, somewhat tame. and we're seeing, you know, with these new tariffs is that things haven't changed much yet. Now, whether or not companies are absorbing that, we'll see shortly because we are in the throes of earnings season.

4:47And we've seen a few things, right? We've seen some problems with like Dow Chemicals. I don't know if you saw that, but they were losing money. We saw one of the worst numbers in terms of same source sales shrinkage with Chipotle. Tesla's car sales are just abysmal. Google's doing better. That came out this week. And a few others. Bottom line, though, is here when we look at these companies and we look at what's going on, there seems to be an absorption possibly going on and a slowdown by the consumer to a degree. Nothing to be like, oh, my God, get out of Dodge. That's not what's happening. And even if there was this multiple expansion that we've been seeing with regard to the markets, rather than an earnings-led increase in the valuation.

5:35I mean, we're seeing that, what, 22 and a half right now, right?

5:41On the forward PE, that's saying something. That's saying that investors are not either worried or dumb, I don't know, but the wisdom of the crowd you have to go with, that they are looking past whatever may be happening right now to the benefits of what we're going to see, let's say, six months to a year from now, and willing to stay on the horse, right? Not getting off, not getting bucked off. As a matter of fact, anytime something seems down, it's a buy signal. And even though retailers like Costco and Walmart are absorbing costs, they say they are. In an effort to maintain this price stability, they're losing pricing power.

6:25The whole discretionary sector is losing pricing power. Now, maybe some of these companies have done better than expectations. That's great. But let's not be fooled. When we look at the actual raw numbers, many of these companies are not doing so well. You look at it year over year, some of these companies are 25 % down. If we exclude and take out some of the maybe hyperscalers and maybe some of the tech like semiconductors. Put that aside for a second. There's a lot of commentary coming from these companies that, you know what, consumers are weaker. You know, we're hearing that hotel bookings are in the toilet.

7:02We're seeing that the price per seat, the revenue per seat from the airlines is not doing so well. American Airlines came out with their numbers this week. I don't know what's going to happen with the cruise lines. We're not there yet. But inflation, we look at core PCE, which is, of course, the Fed's preferred measure of inflation. is near its slowest annual gain in over four years, which is, again, fueling speculation that we're going to have some rate cuts coming up. Now, meanwhile, President Trump wants the Fed rates to be, the Fed funds rates, to be closer to like 1%. He's been all over the news, right?

7:38Beaten up Fed Chair Powell and the fact that he should be fired, but some of that rhetoric's died down a little bit, but yet he's going over to see what's going on with the cost overruns on this construction project here at the Fed. The redo, the renovation, that's like$800 million, $800 million, over budget. It was about 1.7 original budget, now it's about 2.5. Hmm. But yet, markets could care less. To a point. Look at Sherwin-Williams stock, right? That's kind of interesting. I thought it was miserable earnings and a pretty concerning outlook. Guidance was definitely soft. So on the number, stock was down about 4 % for a bit and then finished the day down a mere 0.36.

8:25Now, that may have had something to do with the fact that that day, Pulte, for example, Pulte Homes, and who was the other one? Oh, D.R. Horton, both reported, both housing, major housing megas, pretty good numbers compared to expectations that it wasn't as bad as they thought. Maybe some of the pricing came down and they gave a relatively rosy outlook. Look, those stocks soared and maybe Sherwood Williams was like, okay, okay, maybe not that bad. And sure, the stock, Sherwood Williams went from a high about 400 down to about 330 from the start of the year to then. So I think there was something about this Pulte and this D.R.

9:05Horton number, Dr. H, that came in and helped prop it up just for the time being. Because the question is, a lot of people are asking, right, can we think about the idea that maybe we're getting nearer? near the bottom of the cycle for housing, which is like what? Because housing on a year over year basis, if we look at the Case Shiller National pricing average, on the totality of it is up about 3%. Now, housing activity is definitely down, but prices are still up. We're not in a downturn necessarily if we look at all of it, right? There are some pockets and places and things that are different, But the problem with housing is not the rates.

9:50Just to be clear about this, it's the prices. If we drop rates and we take rates down significantly, trust me, prices are going to ramp higher. It's all adjusted. It's a natural process. But we still haven't seen that price drop as much as it should be with regard to the differential in how interest rates went up over the last two years, let's say. to where housing prices are now. Again, there are pockets of places around the country that are having some difficulties. And yes, the days on market has been increasing for housing across the country. That's a blanket statement. It takes longer to sell your house.

10:35But housing is still relatively strong. Dropping the rates and taking the long-term mortgage rates down from let's say six and a half down to what? I don't know, four? four and a half, is only going to goose the prices of housing. Now, some say that's good. The affordability factor still won't be there, though.

10:59Now, one of the other things that's going on recently, I found this really kind of like, hmm, that's something you want to think about, is last week, the sudden moves in some of the meme stock names, like Krispy Kreme, Koss, right? You remember these names. Back in the day, it was GameStop. It was Build-A-Bear. It was BlackBerry. It was these names that went berserk. Riley. Then we saw Kohl's up at a point 100 % on Tuesday. SPACs are making a comeback too. So the risk on is there. And the question is whether or not there's a topping process for the bull cycle. I mean, there is no fear, right? The midweek level of the VIX was like at 15.

11:49It looked like it was going to go even lower. Now, we know that, generally speaking, July is a month that usually has some of the lows when it comes to the VIX. But all the news flow, even though we have no details on much of it, right? These deals, these theoretical deals with Japan buying agriculture and planes. This is the same story, the same discussion as last time. Not much more incrementally. When I say last time, 2016 deal, when we had all these unbelievable deals that went on, right? Anything to get a deal done. And more importantly, we've had no conversation about accountability. Because last time we saw this, that this company or that company is going to build a$500 million plant in Oshkosh and hire 5 ,000 people.

12:37We didn't have the accountability. A lot of these things didn't actually come to fruition. We know that. Now we have Europe getting a deal done maybe by August 1st, just only, merely, slightly, 15 % across the board tariff with some concessions. Again, nothing major here. So what's happening? Why is it happening? It's more of a relief. What we have is the very simplistic view of let's create some problems, Let's fix some problems and take a victory lap, slap on the back. Everything is great. We're happy. And the markets are just relieved that it's not anything worse. And that's why we're seeing all of this is back to the point I made a few minutes ago, this multiple expansion that is not based on earnings right now and the ability for investors to slough off, to say, not big deal.

13:35I'm not worried about this. And hold to what they believe is something in the future that's going to be a lot better. That's where we are right now in this cycle at the end of July. So something to think about. Something to think about. Now we're going to get to our guest in a minute. Very excited about having Jim back on. Good guy. And the next few weeks actually have some people coming on that we have to shift the time that we talk to them because they're either in Singapore or they're in Australia or they're in somewhere else that the times are all wonky. So I got to get in here either really early in the studio or stay really late in the studio to make sure that we can spend some time with them.

14:24But before we do so and before we get to our guests, I want to talk about Interactive Brokers because at Interactive Brokers Bond Marketplace, You can access over 1 million global bonds, including, this is pretty cool. You got government, you got corporate, you got municipal bonds, all, this is the best part, all in one place. With IBKR's bond search tool, finding and comparing yields against other brokers has never been easier. Streamlining your investment decisions. Now, you can also trade U.S. Treasuries around the clock five days a week, which allows you to react to market news and economic events whenever they happen.

15:01and you can trade bonds with no markups or built-in spreads and low transparent commissions, which can help, of course, improve your returns. Now, rated a top online broker, Interactive Brokers has won awards from Barron's, Investopedia, Stockbrokers.com, and has been Benzinga's number one overall online broker for bonds four years in a row. Interactive Brokers is a member of SIPC Visit ibkr.com slash bonds And start trading today Now let me tell you a little bit about our guest today Jim Rogers He's a native originally from Alabama He's an author, financial commentator He's an adventurer You know, he wrote his motorcycle He's got, get his book of world records For motorcycle riding around the world and a very successful international investor.

15:58He's been frequently featured in Time, the Wall Street Journal, Washington Post, New York Times, Barron's Forbes. It just goes on and on. Business Times, Straight Times, everywhere. He attended Yale and Oxford, and he also co-founded the Quantum Fund with George Soros, which is a global investment partnership. Currently, he's in Singapore, citing his strategic location and economic dynamism as key reasons for relocating from the U.S. So pretty cool. Pretty cool. Let's get right to our discussion with Jim. So, Jim Rogers, how are you? Nice to have you on. Again, I appreciate that. Well, I guess I'm fine.

16:40I hope I'm fine. We'll find out in a few minutes, won't we? Yeah, we will. So, you know, one of your greatest investment successes is, I think, widely recognized as co-founding of the Quantum Fund with George Soros in the 70s And over the next decade, achieving, you know, like 4 ,200 percent returns when the S &P 500 rose, you know, just 47 percent during the same period. And I guess what I want to talk about is to start with is not only how you did it, but like what was the emotions involved in that? Because it probably took some real good cojones, if you will, to really make those bets. Well, Andrew, those days I never thought I was working.

17:21I was just having fun. Both of us were. It was just a gigantic challenge. I mean, it was a daily of fun every day. Every day I went to work. It wasn't work. I was just going down to have fun. I couldn't believe how much fun we were having. And I guess if you get it right, it's more fun than if you get it wrong. Right. During that time, most investors were like looking at equities. But you took this contrarian stance. You went long on oil and gold and raw materials at the time. I mean, did you start out with, oh, you know, we're going to be a commodity shop? Or it was just like, oh, there's just something so juicy here that we need to get in there?

18:03Well, foolishly, when I started the business, I didn't realize that you had to limit yourself to shares on the New York Stock Exchange. I was always very interested in everything. I remember once talking to some guys about Danish Krona. They looked at me like I was a crazy person, a fool. And they went to the other side of the room. But always from the very beginning, I knew there were many, many markets. We both did. And we were extremely interested in all those markets, both long and short. And so we did it. I mean, not many people did that sort of thing then. But we didn't think anything of it.

18:41We were just trying to find ways to make money. You know, it's interesting because I did some, I was thinking about this. I was thinking about, you know, because I've studied your history and I've looked into it and we've, you know, talked together several times. And I kind of, well, let me read this to you and you tell me what you think. I kind of jotted down some notes here. I said to myself, you know, back then, from what I can discern, you saw that central banks were printing money and eventually devalue currencies and boost real assets. You also saw all this geopolitical tensions. Like back then, it was the Middle East conflicts, right, and how it would disrupt supply chains and maybe spike prices.

19:21And you believe that commodities were deeply undervalued. Boy, I think we could kind of just overprint that on today, right? Well, actually, there are many times in history when commodities have been undervalued and have skyrocketed, many times when they've collapsed as well because they were overvalued. But yes, if you get it right, but Andrew, that's true of anything. That's true of railroads. That's true of bonds. That's true of currencies. That's true of anything you want to invest in. So do you, there are, I guess what you're saying is there's some parallels today, but maybe it rhymes, it's not a exact.

20:05Do you have concerns today about the central banks printing money and the geopolitical tensions and it seems like runaway equity prices? Of course I do. I mean, stocks everywhere except Uzbekistan and China are making all-time highs. Everybody's having a lot of fun, Andrew. In my experience, when everybody's having a lot of fun, it's great. You can join in or you can get worried and go to the other room and try to figure out what's going on. So are we towards the end, do you think? I mean, I'm not asking you to really do a total because I don't buy into the idea of trying to project a price or a definitive top.

20:47But, I mean, are we kind of towards the last innings or is this the start of a new bull run because of just a new investor out there? Well, Andrew, we'll talk about America because it's the most important. The American market's been going up since 2009. That's the longest in American history without a problem. I repeat, it's never happened like this in America before. So that says to me that maybe I should ask some questions or maybe I should get worried. It may be, I mean, Washington will tell you, don't worry. Everything is OK now. It's all different now. We have solved all the problems. If you believe that, fine.

21:31Great. Wonderful. But I happen to know they're wrong. And I know we're going to have more problems eventually. I have not started selling short, but I know problems will be coming eventually. Yeah, it's funny because you look at the interference by governments with central banks, particularly in a place like Turkey, when the current residing, well, I guess he's in charge of the country, but also the central bank, decided that lowering interest rates would be beneficial for inflation, which didn't really work out so well there, and a few other places around the world. There's only a couple of places.

22:13I think it was Venezuela, Argentina? Was it Argentina that he got involved to? I forgot it was Argentina or Venezuela. But anyway, both countries, runaway inflation. I don't know. Do you project that if we get a politicized Fed that we could have similar outcomes here in the U.S.? Andrew, I've been around long enough to have heard many, many strange, strange, strange theories and approaches to any country's economy. Yes, I find that very strange, what you just said. But I happen to, in my experience anyway, that I know that if politicians make mistakes or central bankers make mistakes, it leads to problems.

22:56It always has. And I suspect it always will. I'm worried. You should be worried. Yeah. I mean, the U.S. obviously has been in an upswing. But you look around, you're in Singapore. I mean, you're seeing all-time highs in many Asian markets around the world due to their heavy technology exposure, but also the upswell of the idea that, you know, finally it's the time for, quote-unquote, emerging markets and the dollar that's down what? The dollar basket's down like 10 % this year against major currencies. Well, I mean, I own U.S. dollars, so I'm not happy to hear it. But compared to most currencies, I don't know any currency right now in which I want to invest except U.S.

23:40dollars. I am looking. I am looking for the next competitor to the U.S. dollar. And if you know it, Andrew, please don't announce it on the show. Send me an email. Send me a private email. I'm looking. I hear you. It is kind of interesting that we're still, it seems like the whole world is still in this. Even though they say they're not to a degree, maybe with the exception, well, not even the exception of Japan. You know, there's quantitative easing. Everybody is still, I think, in easy money. Even though the Fed says they're tighter than we should be, we still have enormous amounts of debt out there.

24:14Is this debt issue going to eventually become too top-heavy for countries and have us go into, I don't know if it's some other monetary policy quest? Well, Andrew, the United States is the largest debtor nation in the history of the world. No country has ever been so deep in debt. And the debt goes up every day. In Washington, they think there's no – they don't even know. Or if they know, they don't care. They think it doesn't matter. I've been around long enough that I think it does matter, and I know it's going to lead to gigantic problems for us, us being the U.S., before too much longer. It always has, and I'm afraid it will again.

25:01The problem that I'm having is I don't know another currency or another market to where to go. I remember that when I lived in New York, we'd go to Manhattan, And there used to be, you've probably seen this because you used to frequent New York. There used to be that giant debt clock. Remember that giant long debt clock that was on some building somewhere? I don't know if there's enough digits anymore to actually had that debt clock up there. Well, I remember the debt clock. I doubt if it's still there because as you point out, there's not enough room. The debt's so high, they don't have a place to put it now.

25:41So let me just, on this one other point, and finish this off, put a cap on this. When it comes to central banks, and like you said, you've said it many times, you've been around a long time, and you've seen many different gyrations. I mean, I don't know, can you remember the earliest Fed chair that you can recall during your business tenure? What was that, back in the 70s? Was that, was it Volco? No, before Volco, wasn't it? Well, I remember McKesney Martin was the first name that comes to mind for me. I don't know if he's the first one, but he's the first one I remember. He was a knowledgeable guy.

26:20He even had some sound policies at times. But, I mean, since then, William McKesney Martin, I mean, we've had some interesting people. Oh, interesting. That's a word. Some quacks. Quacks is another word. Yeah, yeah, yeah. They seem to be, and this seems to be this weird global attraction to the same shenanigans, the artificial 2 % inflation rate that seems to be everybody's adopted as a number. And then we go through the quantitative easing where we buy bonds and sanitize them through the quantitative easing process. on the other side and all that. I don't know. Do they have the tools that would be effective still to this day to manage any downturns, even with all the debt they have?

27:16No, of course. Andrew, these guys are people who are looking for government jobs. They're happy to have a government job. They think it's great to have a government job. Now, I happen to know government jobs usually are not a good place to be, and the people who want them are usually not the people we want running the world economy. So I am not, for the most part, other than one or two people in the last 30 or 40 or 50 years, we haven't had good central bank policy heads in the United States. And I'm afraid we won't either in the future because, I mean, most people wouldn't take the job, Especially if they take the job, they know they cannot do what they have to do.