Wednesday, November 4, 2015

Future of Financial Services and Investment sector

Trading is becoming more automated, we cannot stop progress. There are going to be a lot fewer human beings in finance, there is no question about that. But we still have to tell these machines what to do. There will be fewer traders in the business. 

We have had long cycles in the world where the financial types were on top of the world and then it collapses; then we have long cycles with producers of real goods on top. When I went to Wall Street, finance was a backwater. After what had happened in the Depression and the War, I mean the last place anybody wanted to go was Wall Street or the City of London. Especially London, they had exchange controls, the nation was going bankrupt and other problems. Then along came the great bull market of the 80's, 90's. But now the world is changing again. I am sure you read that thousands of people are getting laid off in the financial community whether it is banking, insurance, stockbroker and/or investing. It is not an easy to place to get a job anymore and not an easy place to keep a job, but the numbers continue to decline. Great people can always get a job and keep a job. That is in part because there is so much competition because everyone now wants to get into finance and get an MBA. In 1958, America graduated 5,000 MBA's, the rest of the world graduated none. Now America graduates 200,000 a year and the rest of the world graduates thousands more. There is massive competition. 

It is a time when there is big leverage in the financial community. In the old days, banks and brokers had very little leverage for historical reasons now there is massive leverage everywhere. 

By the way, Lehman Brothers had been around since the 1850s and Bear Stearns was around from 1922, it was not like these were Johnny-come lately operations. You have governments being very anti-banker, anti-investors, and financial types, that are constantly passing laws and taxes and regulations to make it tougher. So it is not the place to be in 2016, unless you love it.

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.