Bob Rodriguez on the pressure on portfolio managers to keep playing the casino game

So long as you have [portfolio] managers willing to, shall we say, continue to keep money on the craps table with a roll of the dice, because if they don't they cannot be at the craps table. You cannot stand there at the craps table and occupy a spot. You will be moved out because they need somebody else to order drinks and lose money. So what do the managers have to do? They have to play the game. And this goes up and down the line. Better to fail with the crowd than to try to succeed away from the crowd... I think a whole generation or two are going to have to be reintroduced to reality. You have probably close to 40% or 50% of the money managers in the industry today that have never seen a normal yield curve! They've only seen a manipulated yield curve. They are learning to invest in an alternative universe. I don't believe that universe is sustainable, and which means they will be taken out. 

~ Bob Rodriguez, interview with Grant Williams and Stephanie Pomboy, The Grant Williams Podcast, 37:38 mark, May 27, 2020

Bob Rodriguez on Joe Biden's plan to add addressing black inequality to Fed's mandate

There's one other aspect that concerns me. We have a presidential election coming up. People will be on one side or the other. Looking specifically at one item of Biden's economic plan, it would be to effectively add a third mission to the Federal Reserve’s mandate. The Fed would need to address Black/minority equity and unemployment. This would further politicize the Fed. If this were to occur, I believe it would raise anxiety among many of our holders of Treasury securities, which total more than $7 trillion. If they decided to reduce their holdings, like what has been occurring over the course of the past year, this could put additional pressure on the dollar. It would also likely mean the Federal Reserve would have to be the buyer of last resort. This could increase the size of the Fed’s balance sheet even more so beyond the deficits that will occur over the next five years.

~ Bob Rodriguez, "Bob Rodriguez: We are in a Rolling Depression," by Robert Huebscher, Advisor Perspectives, September 7, 2020

Bob Rodriguez on state and local government responses to the coronavirus

Q: I would like your input on how state and city governments have responded. What do you see were the biggest mistakes and where were there any successes? 

Rodriguez: I would ask, “What has been the economic loss caused by government, be it federal, state or local?” Their actions killed the economy. There was a lot of talk about following the science. Remember when Dr. Fauci said, "We have to shut down because we have to bend the virus curve downward so we don't overwhelm the medical care system." Then it morphed from getting the curve down to having a vaccine. The goalposts keep getting moved. This has become very political. Once I saw the data that was coming out, both here and abroad, back in April, I viewed myself as not being much at risk. Even though I'm nearly 72, I'm very healthy. I don’t have any comorbidities or anything like that. I view the perceptions of risk from the virus as being vastly overestimated by a large proportion of the populace, especially among the primary working class people between the ages of 21 and 55. 

The government, be it federal, state, and local, used a blanket approach rather than a targeted one. We effectively killed the economy to protect a small percentage of the population. I viewed it as very bad policy. I've been traveling around the country since April. I take appropriate precautions. I couldn't believe the airfares. As an example, I flew from Reno to Dallas to have lunch, do some business, and then flew on to LA, all first class, for $217 on American Airlines. Nobody was on the flight. I considered flying one of the safest places to be.

There have been a lot of mistakes made. But, you can't really second guess these people to a great extent. They were dealing with something they weren't prepared for. You have to give some a “get out of jail free” pass. But for others, I have my reservations. In Northern Nevada and Lake Tahoe, we've taken a far saner approach, and people are a lot happier here than they are in Manhattan Beach, CA, where I have a second home.

~ Bob Rodriguez, "Bob Rodriguez: We are in a Rolling Depression," by Robert Huebscher, Advisor Perspectives, September 7, 2020

Bob Rodriguez on stimulus cash: private savings vs. public dis-savings

The consumer has saved a lot of money because they've gotten all this stimulus cash. They've paid down debt. They haven't spent much more than maybe half of what they've received. This is viewed as a positive. But I say, "That's only one side of the equation." The offset is the government borrowed this money, so it results in a negative savings rate and the net effect is a system-wide savings rate that hasn't been improved. It's a very pernicious environment.

~ Bob Rodriguez, "Bob Rodriguez: We are in a Rolling Depression," by Robert Huebscher, Advisor Perspectives, September 7, 2020

Bob Rodriguez: "We are in a form of rolling depression"

What the Fed threw at the system was emergency stabilization. In light of these actions, the economy remains in a quite tenuous position. In fact, I've used a phrase with my former colleagues and friends – we are in a form of “rolling depression.” We're not in a recession. Most people don't know the difference between recession and depression, other than saying, "a depression is worse than a recession." A depression occurs when there is a structural shift downwards in the economy, and it stays near this lower level of economic activity for a prolonged period of time.

~ Bob Rodriguez, "Bob Rodriguez: We are in a Rolling Depression," by Robert Huebscher, Advisor Perspectives, September 7, 2020

Bob Rodriguez on the Fed's response to the March Covid panic

Q: How should the Fed have responded? 

Rodriguez: I don't think it could've done virtually anything different because it had become a prisoner of its own policies enacted over the prior decade. Those policies rewarded excess and encouraged speculation. It was too late to respond differently; the die was cast.

~ Bob Rodriguez, "Bob Rodriguez: We are in a Rolling Depression," by Robert Huebscher, Advisor Perspectives, September 7, 2020

Bob Rodriguez on the futility of economic stimulus

[President-elect Barack Obama] will try to stimulate spending with one foot on the gas, while consumers are pushing on the brake [by saving.] We're in for a very discontinuous environment.

~ Bob Rodriguez, "The Doomsayers Who Got It Right," The Wall Street Journal, January 2, 2009, by Jeff Opdyke

(Thus, he says, the economy will sputter in fits and starts. The recession will deepen over the next six to 18 months.)

Bob Rodriguez sitting on 43% cash

Bob Rodriguez, manager of the $1.9 billion FPA Capital Fund, is 43% in cash, up from 40% more than a year ago.

~ The Wall Street Journal, "Cash-Rich Mutual Funds May Battle Bear," January 19, 2008, by Diva Gullapalli