Jim Rogers Blog

Monday, February 23, 2015

Jim Rogers predicts the future of American universities

One of the more vital aspects of an American university education will survive even after the current bubble pops: the experience of going away from home to live and learn among hundreds or thousands of other eighteen- to twenty-year-olds. 

Sports teams, debating societies, social events — all will continue, even if much of academic life is conducted via a computer in a dorm room. Lecture halls might even survive, with lectures being piped in via satellite. Libraries will disappear or be converted to tennis courts.

The "creative destruction" caused by technology combined with an absurd, unsustainable cost structure will give rise to whole new centers and ways of learning — just as has happened throughout history. We have all forgotten the names of the former great world universities in places like Morocco, Timbuktu, Portugal, Italy, Asia ... the list goes on.

Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.

Monday, February 16, 2015

Universities having debt on their books

Harvard — and this applies to all the elite schools — does not manage a lot of this money itself. A hotshot private equity guy comes in and says invest in our fund, and Harvard gives him $100 million. He goes out and invests in new ventures or buys companies; whatever he does, he marks it to model and Harvard accepts his numbers. Now the fund manager has every incentive to jack up his valuations, just as Fannie Mae and Citibank did, and just as everybody else who was using mark-to-model did. And Harvard loves to accept the numbers with pride.

All of them, in the bull market, thought they were making huge amounts of money. They spent. They gave everybody raises. Harvard went out and bought huge amounts of acreage in Boston. Yale bought a lot of acreage. They thought: We have all this money; it is time to expand; we can be generous. Then they all got hit with the truth — the financial meltdown — and what some of them did was start borrowing. They started selling bonds to the public, based on their respectable names and their AAA credit, and the market bought into it.

Several universities, for the first time in their histories, now have debt on their balance sheets. They have bonds they have to pay off. At the same time, many of the portfolio managers have leveraged the portfolios. They have bought things on margin. It is a classic case of how companies and institutions get into trouble. They borrow things, being told that there is no problem. Things go bad, then things get worse, and they realize that this is a permanent state, that they have a serious problem. It is especially a problem in academia because they cannot cut their expenses. They have unions, tenured professors.

Some of the people running these university financial departments are not terribly clever. The same is true of many pension plans. Many state and city pension plans are bankrupt. In the next bear market, whenever it comes (and it will probably hit pretty soon), you are going to see more of the same. 

It will come as a huge shock to the world when Harvard University or Princeton or Stanford goes bankrupt, when these institutions that have been around for decades, for centuries in some cases, understand how bad their finances are.



Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.

Wednesday, February 11, 2015

Jim Rogers predictions of Hard Times economically

We're going to have economic hard times again. Next time it will be worse because the debt is so much higher and because for the first time in recorded history, all major central banks are printing huge amounts of money. So there's this gigantic artificial ocean of liquidity that's going to dry up some day, and when it does, we're all going to pay a terrible price. 


Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.

Monday, February 9, 2015

Jim Rogers warns some American colleges near bankruptcy

Several elite universities in the United States are now on the verge of bankruptcy. Their expense structure is unsustainable. You cannot run a business of any kind where your top people work only five hours a week, or work even ten hours a week. Do it and you are going to go bankrupt, especially operating within the constraints of a system like tenure, where it is not possible to fire anyone, not even those who, by virtue of the system, do not work very hard in the first place. Add to that the fact that Ivy League universities are traditionally overgenerous with labor, because they do not want to appear to be filthy capitalists, and bankruptcy presents itself as a blessing. We saw it with the automobile industry. The unions would come around when the contracts were up, and the auto companies would cave in. They just kept giving away the store. Eventually it bankrupted the industry.

Part of the problem is that these institutions are run by academics; they are not run by entrepreneurs. The universities are badly managed, and their endowments can no longer save them. Much of what makes up their endowments is phony. A lot of what these schools have invested in over the past twenty years has been things that are illiquid, assets for which there is no public market, whether timber or real estate or the main one, and most crippling: private equity. 

In the bubble, many financial institutions carried what are known as Tier 3 assets. These are assets whose value was no more than hypothetical--mortgages, for example. Their market value was "marked to a model." If your computer program said a particular piece of paper was worth 96, you wrote down 96. Moody's and Standard & Poor's said the paper was AAA and therefore worth 96. But we know now that most of that stuff was garbage. And it is that kind of stuff that makes up a very large share of the endowments in question.


Monday, February 2, 2015

Jim Rogers speaks out against university Tenures

American universities used to be places where excellent teachers could be found, where the best of them rose to the top. But then along came tenure. It is the brass ring on the academic merry-go-round, and excellence in teaching has never been the way to attain it. Publishing and research and campus politics are what lead one to tenure. In pursuit of it, as often as not, teaching is seen as a distraction. I remember a professor once telling me, "This is a fantastic life. Too bad we have all these students around."

Tenure, at its worst, is where incompetent teachers find refuge. American academia is controlled by tenured faculty. They do research; they go to the library. Most will not say it, but students coming around, whether in need of extra help, complaining about their grades, or submitting papers that have to be graded, are an impediment to what they see as the real work of a college professor.

There is no profession in the world, anywhere in the world, where if you work for seven years you get a lifetime guarantee of a job. Except at a university. Becoming a doctor, becoming a partner in a law firm, you still have to produce. If you have tenure at a university, by the time you are thirty-five you never have to prove yourself again. Unless you burn down the university or murder somebody, you have a job for life. And a job as a college professor is the closest thing this side of political patronage or a mob-run construction site to a no-show job. 



Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.

Thursday, January 29, 2015

Gold will bottom when the faithful give up

Gold
I’m the world’s worst market trader and timer. Well, yeah, when there’s panic. I – we haven’t seen panic – I haven’t seen panic yet in gold. When it happens, and when you see some of the faithful throwing in the towel and say, “Gold has mistreated me. She cheated me. She lied to me. I’m never gonna touch gold again,” then that’s gonna be a – some kind of a bottom. 

But I haven’t seen that yet, and I don’t even know how visible that will be. If you watch television, you’ll probably see a lot of people giving up on gold. But I haven’t seen that happen yet.


Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.