“The next bear market will be the worst in my lifetime.” – Jim Rogers
Jim Rogers, who has been a household name in the investment world for decades, is no stranger to the headlines. Known for his natural charisma, easygoing southern charm and trademark bowtie, he has long been an industry favorite for interviews and guest speaker slots. But what he is most known for is his willingness to go on record with bombastic, headline-worthy predictions. It’s no surprise that the media love this guy. In a world where the competition for consumers’ attention is as fierce as ever, the fact of the matter is that Jim Rogers sells. Which perhaps is why Yahoo Finance’s homepage featured the opening quote as it’s headliner for the better part of the day yesterday. But more on that later…
Rogers was born in 1942 and started his Wall Street career after graduating from Yale in the mid-60’s. In 1973, he and an associate named George Soros (also a household name) left the brokerage house they were working at to start a hedge fund called the Quantum Fund. Within a few short years they had carved out their place in investment history, having returned 4200% over a period of time in which the S&P 500 had only climbed 47%! In 1980 Jim Rogers retired a wealthy man at the ripe old age of 37.
Rogers spent the next two decades traveling, investing, teaching, speaking and writing. One of his books was written while traveling the world – over 100,000 miles across six continents - on his motorcycle, a feat for which he holds a Guinness World Record! Perhaps most importantly for his career, this time period of his life was also spent solidifying his celebrity status within the financial media and investing communities.
Along the way he was also intentional about cultivating a brand as a commodities expert. In the late 90’s he created a new index for the asset class, the Rogers Commodity Index, and he took every opportunity to tout the long-term appeal of investments into natural resources over traditional classes like stocks and bonds. Additionally, the last 10-15 years have been spent positioning himself as an expert on Asia. In 2007, in fact, he sold his New York City mansion and moved his family to Singapore, citing the greater China region as having the brightest future prospects in the world. His entire family speaks fluent Mandarin.
And through it all Jim Rogers has remained steadfastly bearish on the US stock market. Indeed, his “perma-bear” status is more a part of his personal brand than any of the characteristics listed above. Which brings us to the headline that caught my eye on Yahoo Finance yesterday... “Jim Rogers: ‘The next bear market will be the worst in my lifetime.’”
On the surface this headline might not be all that unusual. After all, people are making bold predictions all the time, right? But when you really think about it, what Jim Rogers is suggesting here is that the next bear market is going to be worse than Black Monday, the Savings and Loan Crisis, the Dot Com Collapse or (most significantly) the Global Financial Crisis. In other words, we’re about to experience the worst financial market collapse since the Great Depression itself. Possible? Sure. But a bold prediction nonetheless…and just more of the same from a “legend” who has cried wolf one too many times.
Looking back through Jim’s track record provides some important context for this most recent statement. The fact of the matter is that these types of Chicken Little declarations are a dime a dozen from Mr. Rogers. Yahoo Finance, in fact, recently published a list of just a handful of similar headlines going back several years…
Perhaps one of Rogers’ most infamous predictions, which somehow failed to make this list, was when he claimed the chances of a recession in 2016 were no less than 100%. It took about 10 seconds to find a multitude of links referencing this little gem on Google…
Jim Rogers is a big personality. There’s no denying that he’s an incredibly smart man with an extensive knowledge base. He’s had enormous success in the markets, and is considered by some to be amongst the greatest investors of all time. It wouldn’t be an understatement to suggest that in the world of finance he’s truly legendary.
There’s just one problem…you can’t really listen to anything he says.
We have no problem with prognosticating. With holding a conviction and presenting evidence to support a stated thesis. But the fact of the matter is that even Jim Rogers doesn’t have a crystal ball. The interplay between global economic forces and asset markets is infinitely complex, and a certain measure of humility and open-mindedness is warranted when speculating as to what might happen next. Jim Rogers, like so many others who experience dramatic success early in life, has no such humility. His opinions and predictions are expressed in the most dogmatic forms that cross the line of confidence well into the realm of hubris. He is obviously entitled to think and say whatever he wants, but given his position of influence his communication style is somewhat irresponsible in our opinion. And the way the media eat it up while providing little to no accountability, while not surprising, is incredibly obnoxious.
All of this reminds us of the eleventh danger of reading the news that we discuss in our post Side Effects May Vary. This danger states that “reported facts are sometimes wrong, forecasts always.” Unfortunately this reality has little to no bearing on the amount of air time Rogers, and others like him, will continue getting in the press. So the next time you see an outlandish Jim Rogers quote on the front page of your favorite financial website, please resist the urge to “sell everything and run for the hills.” Instead, take our advice and just keep scrolling.
Author David Houle, CFA is a founding member of Season Investments. He serves as the firm's Chief Compliance Officer as well as sitting on the investment committee overseeing the management of client assets. David spent nearly ten years in various roles primarily managing individual client assets prior to co-founding Season Investments. David graduated with a degree in Finance from Colorado University in Colorado Springs in 2003 and earned the Chartered Financial Analyst (CFA) designation in 2006. David and his wife Mandy have three children and spend most of their free time with friends and family.
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