32 BARRON’S December 7, 2020
this period. We can have a wonderful time while the guy
is printing and buying, printing and buying.
What about the U.S. market? It sounds like you
think it is headed for a fall.
It’s going to be the worst in my lifetime when it comes,
but I am the world’s worst market timer. I do know that
every time we have staggering amounts of debt and
stocks that get too high, we have a bad down market. In
2008, we had a problem of too much debt, and look out
the window now—the debt is gigantic.
When would you guess the selloff will come?
In the next year or two. The market is already showing
symptoms of a bubble. There’s exuberance in America,
even for people who are depressed.
Are other asset classes more promising?
Bonds have never been this high in the recorded history
of the world, so that’s a problem. The cheapest asset class
is commodities. Silver is down 50% from its all-time
high; sugar is down 80% from its all-time high. Agricul-
ture is a disaster. I am buying more agriculture as we
speak because it’s so depressed. Maybe we’re never going
to eat again, maybe we’re never going to buy clothes
again, but I don’t think so.
It is almost incomprehensible that there is anything in
the world that is down 80% in price. With sugar, people
are worried about health and obesity, and sugar-producing
nations continue producing lots of sugar. From what I
gather, that’s coming to an end, partly because of the virus.
People aren’t out racing around to produce more sugar.
World inventories are being worked down. I presume that
someday, we are all going to put sugar in our coffee again
and we are going to eat candy bars. There have been occa-
sional buying opportunities in sugar in recent years.
What is the best way for investors to play
agricultural commodities?
Well, I’m lazy—I’m buying an ETF. It’s the Rogers Agri-
cultural Index. [The index tracks21 agricultural com-
modities. Rogers developed it and licenses it for use with
an exchange-traded note, the Rogers International Com-
modity Index Agriculture Total Return, ticker RJA.]
Jim, you’re usually on the go. You’ve circumnavi-
gated the world twice, first on a motorcycle, then in
a Mercedes. When the coronavirus is finally tamed,
where do you want to go first?
The airport. There are plenty of places that I haven’t been
to recently that I’d like to see. Oh my God, can you get me
a flight?
Thanks, Jim.
—Phil Roosevelt
RICHARD THALER
Professor of Behavioral Science and Economics,
The University of Chicago Booth School of Business
Chicago
Barron’s:What investment opportunities should
investors look for after the pandemic?
Richard Thaler:It’s not knowable. That’s exactly the
sort of thing that we pride ourselves in not doing—trying
to forecast what the world is going to look like six
months from now or a year from now. For individual
investors, the best strategy is benign neglect. Create a
sensible long-term portfolio, and then ignore it.
What should be Washington’s top policy priority?
The pandemic has revealed that inequality was even
worse than we realized. It has hit the poorest of our pop-
ulation the hardest. The top three-quarters of the econ-
omy—we’re doing OK, and in fact, saving record
amounts, primarily because there’s no way to spend the
money, or none of the usual ways. The bottom quarter
has very high unemployment rates and very high inci-
dence of Covid, and what we’re going to do structurally
to help out on that is a big question. How do we get
America to be the true land of opportunity if you happen
to be unlucky in who you picked as parents? I’m not
somebody who believes that we should just be taking
money away from the rich because they’re evil. I’m much
more concerned with, how do we make it easier to climb
up the ladder if you’re starting out?
How did you get involved in behavioral economics?
It’s an overnight sensation that took four decades. I was
being taught standard economic models that assume that
everybody is really smart and unemotional, has no self-
control problems, isn’t absent-minded, never has hang-
overs, and saves perfectly for retirement. And as I would
look around, that’s not what I saw in the world. I started
trying to think about how you could create a different kind
of economics that would include real people. And I was
lucky enough to meet the Israeli psychologists Daniel Kah-
neman and Amos Tversky in 1977. We became friends and
collaborators. Tversky died in 1996, but Kahneman is very
much with us. I just spoke to him over the weekend. I call
them my greatest discovery. What they were busy doing
was trying to show how people’s decisions differ from the
kinds of rational choices that economists pursue. So that’s
what I’ve been doing for 40 years.
Which elements of behavioral economics do you
find particularly relevant now?
Let me first say that it’s not that people have gotten any
smarter over the years. So, I don’t think there’s any prob-
lem that we were studying early on that is no longer rele-
vant because people have figured out how to stop making
that mistake. I think the biggest mistake people make, and
one that we are very much seeing over the past six months
or so, is overconfidence. People think that they’re better
than average at almost everything. If you ask people where
they rate their sense of humor, most people think they’re
in the top decile. And that’s because they know what’s
funny. Of course, not everybody can be in the top.
Why is that relevant now? Well, one of the interesting
things we observed in the past six months is a big increase
in retail investing at the level of individual securities. My
opinion is, for individual investors to be doing that is a fool’s
errand. The world has conspired to make them overconfi-
dent now because the market’s been going up pretty
steadily, and it has been going up fast in the segment of the
market that retail investors have been most attracted to. So,
it’s very easy to think that you’ve figured this stuff out. If
tion again and seeing them happy would be my ideal.
Thanks, Stephanie.
—M.C.K.
JIM ROGERS
Investor and Author
Singapore
Barron’s:How does the world look to you?
Jim Rogers:Oh my God, do you have three days?
We are in perilous times—very, very perilous times.
Will we go back to anything like normal after the
pandemic?
Something else is ahead. A year ago at this time, America
was the largest debtor nation in the history of the world.
That debt is now up by trillions of dollars—that’s trillions
with a T. Someday, we are all going to look back—three years
from now, eight years from now—and say, “Wait a minute,
what about all this debt? What are we going to do now?”
That’s what happened to the U.K. The U.K. was the richest,
most powerful nation in the world in the 1920s, and then
took the path of “it doesn’t matter, we’ll spend all we want.”
Fifty years later, the IMF had to fly into Heathrow and bail
them out. They were bankrupt. So, I am afraid of what I see.
Are other countries going down the same road?
The guy at the Bank of Japan [Gov. Haruhiko Kuroda]
goes to work every day and says he will print unlimited
amounts of money—his words—so he can buy stocks and
bonds and exchange-traded funds. Well, I own Japanese
ETFs. He’s got more money than I do, and if he’s going to
buy Japanese ETFs, I am, too. The Japanese market is
down 30% from its all-time high, and the American mar-
ket is near an all-time high, so I’d rather buy Japan. But
Japan has a dismal future. The debt is staggering. The
population has been declining for 10 years. You don’t
have to be too bright to figure out that if you’re 10 years
old in Japan, you have a dismal future. It has accelerated
because of the virus and because they’re spending lots
and lots of money. There may not be a Japan in 40 years.
It’s tragic, and I love, love Japan.
But for now, at least, you’re investing in Japan.
I wouldn’t be surprised if the Japanese market—and this
isn’t a prediction—went back to its all-time high during Jonathan Wong/South China Morning Post via Getty Images