Jim Rogers calls a next bubble in food again

[brent217]

A long interview on Turd's website, I just had time to listen to it this weekend. In the third video down he goes on for a while on what he expects food to do, and although he does not use the word bubble, he gives all the attributes:

A perceived or real shortage throughout the world
Anyone that can make food (has land, water, seeds and time) will be wealthy
Many people will use technology to grow food for profit in extra house spaces such as their garage.

http://www.tfmetalsreport.com/blog/2...s-good-be-turd

[LargoWinch]

Re: Jim Rodgers calls the next bubble - Food

Jim Rogers has been calling the next bubble of Agriculture and Oil since at least the mid 2000s, but has not yet specified how to profit from it. Jim has also stated since then - wrongly - that gold is not as good as an investment as other "commodities".

[globaleconomicollaps]

Re: Jim Rodgers calls the next bubble - Food

Jim Rogers has been calling the next bubble of Agriculture and Oil since at least the mid 2000s, but has not yet specified how to profit from it. Jim has also stated since then - wrongly - that gold is not as good as an investment as other "commodities".

Gonzalo Lira has an interesting spin on the food issue:

http://gonzalolira.blogspot.com/2011...art-hedge.html

o: Is farmland worth buying as a hedge against inflation?

This is a reasonable question.

Bottom line, the answer is: No.

The reason, however, is worth examining in some detail, because insofar as farmland is concerned, there would be a period of time when it is a clever investment, and then a point after which it would be a terrible investment. And as with everything in life, the dividing line between the terribly clever and the terribly stupid is as smeared and undefined as roadkill on an Interstate.

this is the money shot

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

The problem with farmland as an investment is that as an investment, it requires credit.

Thus in many respects farmland shares the same benefit/harm effect of credit growth or shrinkage with residential real estate. There are also other credit effects.

If you have farmland that is producing, and is not dependent on credit for seasonal financing, and is not dependent on energy prices for fertilizer/seeds/machinery operations, then the story might well be very different.

[Adeptus]

Re: Jim Rodgers calls the next bubble - Food

Jim Rogers has been calling the next bubble of Agriculture and Oil since at least the mid 2000s, but has not yet specified how to profit from it. Jim has also stated since then - wrongly - that gold is not as good as an investment as other "commodities".

I've been listening to Jim Rogers pumping agricultural stocks every opportunity he gets on the MSM for at least the past couple of years. And while agricultural stocks have done pretty well, it was one sector that I couldn't bring myself to invest in. Not because I didn't think it would do well, but because I've been to a couple of third world countries and I know what a huge difference it can make when food prices rise by even a small amount. To me it's imoral to speculate on food stocks that will result in higher prices around the world - specifically 3rd world countries, even if my participation will be microscopic if barely even felt. That's where I personally draw the line. I didn't see the MENA riots coming, but I was able to sleep better knowing I had next to no involvement in that.

Two or three years ago when I first started to learn about all things macro-economics, I used to listen to Jim as often as possible and did learn a few things from him. I regarded him as a successful investor and someone who spoke against the MSM consensus, so I do have some respect for him even if EJ calls him the 'sound bite king' (and probably a 'presstitute'), but as simplistic as his calls are, they have been mostly right, although one can argue of what use they are when he nearly always refuses to give dates of when X trend will start/finish. These days if I see Jim videos, all I look for are any new sound-bites advising of new pattern changes, because that's about all I can get out of his videos now.

Cheers,
Adeptus

[touchring]

Re: Jim Rodgers calls the next bubble - Food

Can we eat gold? A real doomer will prefer a farm instead.

[LargoWinch]

Re: Jim Rodgers calls the next bubble - Food

Can we eat gold? A real doomer will prefer a farm instead.

Can you eat guns?

[globaleconomicollaps]

Re: Jim Rodgers calls the next bubble - Food

Can we eat gold? A real doomer will prefer a farm instead.

Can you eat stock certificates? I cannot even get stock certificates any more. Everything is electronic. Maybe I can eat my computer? As I have pointed out several times before you can indeed eat gold. Entirely aside from the complete non-sequitor, what exactly do you intend to do on this farm? The last set of tomato I put in turned into brown stalks before I could turn around. Do you feel comfortable seeing $60,000 to $100,000 worth of crops turn yellow because you over watered? I hope you have a big cushion. The regularity with which this slogan or quip keeps coming up requires some sort of canned reply that I can past in here. Let me put it like this: Your farm will fail more thoroughly and more completely than if you where suddenly put in charge of a large electrical supply chain with no knowledge of the electrical industry.

[bagginz]

Re: Jim Rodgers calls the next bubble - Food

I've been to a couple of third world countries and I know what a huge difference it can make when food prices rise by even a small amount. To me it's imoral to speculate on food stocks that will result in higher prices around the world - specifically 3rd world countries, even if my participation will be microscopic if barely even felt.

Nice one Adeptus

Same here.

[brent217]

Re: Jim Rodgers calls the next bubble - Food

Can you eat guns?

Guns allow you to eat people with both gold and farmland ;)

http://www.dilbert.com/2011-07-31/

[LargoWinch]

Re: Jim Rodgers calls the next bubble - Food

Nice one Adeptus

Same here.

What is imoral, is not the speculators or food speculation per se, but those (Central Banks, Governments, Fractional Reserve Banking etc.) that promotes this state of affairs indirectly or directly via failed policies that favor the wealthy at the expense of the poor.

[Guest]

Re: Jim Rodgers calls the next bubble - Food

Nice one Adeptus

Same here.

Just exactly how does the price of ConAgra's stock going up enable or cause them to charge higher prices to 3rd world peasants? Those prices are a function of market supply/demand. Corn costs $xxx/bushel whether stock prices are up or down. Stock prices merely reflect the expected future profit flows of the companies involved. If the stocks rise it is because of expectations that profits (and sale prices relative to input prices) will be rising. Buying the stock doesn't cause the prices to rise. Shortages and our exporting inflation to other countries does.

I'm no economist, but as prices increase for food, there will be more entrants to the marketplace as potential profits rise, thus lowering prices again. (ceteris parabus). Higher stock prices and profits means more capital for productivity and other expansion to fill the demand. This is pretty basic stuff isn't it?

[jiimbergin]

Re: Jim Rodgers calls the next bubble - Food

Just exactly how does the price of ConAgra's stock going up enable or cause them to charge higher prices to 3rd world peasants? Those prices are a function of market supply/demand. Corn costs $xxx/bushel whether stock prices are up or down. Stock prices merely reflect the expected future profit flows of the companies involved. If the stocks rise it is because of expectations that profits (and sale prices relative to input prices) will be rising. Buying the stock doesn't cause the prices to rise. Shortages and our exporting inflation to other countries does.

I'm no economist, but as prices increase for food, there will be more entrants to the marketplace as potential profits rise, thus lowering prices again. (ceteris parabus). Higher stock prices and profits means more capital for productivity and other expansion to fill the demand. This is pretty basic stuff isn't it?

+1

[aaron]

Re: Jim Rodgers calls the next bubble - Food

Just exactly how does the price of ConAgra's stock going up enable or cause them to charge higher prices to 3rd world peasants? Those prices are a function of market supply/demand. Corn costs $xxx/bushel whether stock prices are up or down. Stock prices merely reflect the expected future profit flows of the companies involved. If the stocks rise it is because of expectations that profits (and sale prices relative to input prices) will be rising. Buying the stock doesn't cause the prices to rise. Shortages and our exporting inflation to other countries does.

I'm no economist, but as prices increase for food, there will be more entrants to the marketplace as potential profits rise, thus lowering prices again. (ceteris parabus). Higher stock prices and profits means more capital for productivity and other expansion to fill the demand. This is pretty basic stuff isn't it?

Your thinking is pretty basic and only applies to a free/fair market. We do not have that.

There is something wrong with speculating on food when people are starving. Moreover, there is something wrong with putting your money into a corrupt market to start with. In my opinion, Wall Street is evil. You play the market, you are contributing to the evil to a degree, and deserve the market crash you will get caught in.

Of course, if we want to survive we must participate in the "system". So, we really can only do our best to stay on a right path.

Examples of choices that I have made:
Pulled money out of TBTF bank.
I do not put new money into Wall Street -> it takes bigger ones than I have to actually pull it all out and close the accounts, however.
I will not buy stock in bad(morally) companies. No smokes/military equipment/f*** drug companies.
I pulled out of my company's matching 401K plan. Even with the 50% match, it is not worth it.
I use cash more often.

Buying stock in ConAgra is certainly less bad than directly buying wheat or corn. But, they still do their fair share of damage to the world.

[lakedaemonian]

Re: Jim Rodgers calls the next bubble - Food

We just sold our dairy farm.

We purchased over half a decade ago before the big price run up(then crash, then recent recovery) in an undervalued area.

Our farm's energy inputs in terms of fertilizer and fuel is quite low by national and international standards so would be considered semi organic and somewhat "green" in energy efficiency......we are(or were) self-supporting pasture based dairy.

I did believe and still do believe that a pasture based dairy farm with low energy inputs is a rough equivalent to an oil well or Coca-Cola circa 1980.

But I also believe that there is a good chance that if this series of events continues to worsen significantly and we see a choking of credit that it will further surpress ag land prices.

So with the recent spike of dairy prices(they collapsed with energy prices in 2008/9) and the spike in sector sentiment we had our farm packaged for sale and sold at the first really good offer.

I plan on re-entering the sector at some stage.....the only things that would stop me would be a seismic shift in taxation policy on land(such as taxing unrealized gains)......or a catastrophic event such as an unthinkable drop in population.

Effectively, I reckon there is a fairly good chance I could purchase an equivalent farm for 25+% less in REAL terms in the coming years....and we simply didn't want to maintain ownership when we had over $5 million in play.

We reckon the frictional costs in selling and repurchasing in future are more than worth it and will be easily recouped by lower REAL ag land prices in future.

I perceive NZ shifting from relying on Japanese savers to Chinese savers in plugging the credit deficit....but what happens when China takes a hit?

I think there will be some fantastic vulture opportunities in agriculture sometime in the coming decade.......the buying opportunity in the last crash had some decent buys.....but I reckon the best buys will be in the next 1-2 financial seizures.


And then we will hopefully be able to then sit on it for a generation+ or more.

I'm still just an amateur with Ag, only having been deep in it for half a decade or so......but I think the coming decade is going to result in some big winners and losers....and I don't think anyone "owning" leveraged land is going to be a winner.

I wonder if Willy Nelson has it in him for Farm Aid 2.0 the next generation?