Growing up in Alabama, famed hedge fund manager Jim Rogers heard countless jokes about the farmer’s daughter. Today, it seems the joke is on his childhood buddies, who should have married the farmers’ daughters.
That observation was one among many Rogers shared on July 23 with 600 attendees at the fourth annual Innovative Alternative Investment Strategies conference in Denver. Rogers, who earned degrees at Yale and Oxford, declared he was very bullish about farmland and other agricultural products and bearish on Wall Street brokers and Ivy League professors.
If you don’t want to become a farmer, move to the Farm Belt and become a Lamborghini dealer, he joked. Though the image of Ma and Pa Kettle cruising through their cornfields in a sportscar may be as humorous as it is hyperbolic, the prospect is that Farm Belt residents will become even wealthier in the next few decades. The central corridor from north Texas all the way up to the Dakotas already displays the highest growth rates in employment, income growth and savings in the nation. It's the only region in America whose primary limits to growth are supply and capacity constraints.
Still, Rogers warned a global shortage of farmers could become a serious problem. Most farmers in the U.S., Japan and elsewhere are in their sixties or older and young people aren’t entering the business. More Americans are graduating with degrees in public relations than in agriculture, a field that generated fewer than 10,000 college graduates last year.
The global hedge fund manager discussed a wide variety of subjects, including why gold is experiencing “a complicated” bottoming process, why fellow commodities bull Jeremy Grantham’s contention that the asset class is in a permanent bull market is suspect, and why bond fund managers should quit their jobs and consider becoming farmers.
That last bit of advice underscored Rogers’ expectation that a 30-year bull market in bonds is over and is likely to be followed by a bear market with a similar lifespan. In contrast, agriculture is likely to enjoy an extended boom, even if Rogers lacks Grantham’s confidence that most commodities and raw materials will appreciate forever.
“I’ve never seen a bull market [in any asset class] that goes on forever,” Rogers said. “There may be one, but I’ve never heard of it.”
Speaking of the current bull market in U.S. equities, Rogers told advisors, “Enjoy it, but be prepared. I do know it will end, but not when. We’re getting close to the end."
The day that happens won’t be a pretty one. “When it ends it will be a big mess,” he continued. “This will be worse than 2001 and 2008-2009.”
Rogers tends to view monetary policy through the lens of the Austrian school of economics, reasoning that global central bank promiscuity when it comes to printing money virtually ensures that turbulence and tough times will follow the record efforts to jump-start the world’s economy after the financial crisis.