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Jim Rogers on the U.S. Stock Market

"Be Careful"

Written by Marcelina Hardy
Posted October 4, 2013

The Fed is still printing money, and the government is still shut down. It doesn’t sound good, and that’s exactly what's behind a warning from Jim Rogers.

He has two words for all of the investors in the United States: “Be careful.” He's particularly cautioning stock market investors.

jim rogers tightIn an interview with CNBC, Rogers predicts it won’t be too long before the United States faces huge problems. He doesn’t agree with the Fed’s quantitative easing program and other stimulus programs across the globe.

All of the money the United States is printing will end up leading to bigger problems for the U.S. economy, and eventually everyone will see what he means.

While no analyst can ever predict the time of a great catastrophe, Rogers speculates it may in the next couple of years. Historically, there’s been problem almost every four to six years, and since it’s been almost 5 years since the last one in 2009, it’s about that time. Each time there is a slowdown, it’s much worse than the one before, so that tells you the one coming up is going to be quite a doozy.

What worries Rogers the most is the fact that the United States is floating on a lot of artificial liquidity. The Fed has been printing loads of money to keep the United States afloat, and when that money is taken away, he thinks the economy will sink to the bottom.

While there’s no one to blame but the decision makers themselves (Bernanke in particular, who will go down in history as an absolute disaster), one of the reasons this has happened is because the Japanese decided to do it. They said they were going to print unlimited money, so the United States said it would too. The U.K. followed suit, and then the eurozone joined in to save its own struggling economy.

What Ron Paul Believes

Rogers isn’t the only one who is predicting a slowdown in the economy. Ron Paul believes the shutdown may lead to a big problem for the U.S. if it lasts for a long time, but the government isn’t acknowledging that.

Like Rogers, Paul believes the Fed is losing control, but he doesn't think it’s a huge problem just yet. There won’t be any huge increases in interest rates, no matter what the Fed does, and he actually doesn’t see the Fed affecting anything with the trouble the U.S. economy is in.

But Rogers hasn't given the government shutdown a second look. He thinks the whole thing is a big game – a sham or charade. He doesn’t believe it will last too long, and even then it's not going to be a problem because the United States will just print more money to avoid defaulting.

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Rogers' Take on Investments

The stock market isn’t doing well, and it’s not going to get better, according to Rogers. But he isn’t selling. He told CNBC:

I’m not buying U.S. shares at the moment, but I’m not shorting either, because I am concerned this may turn into a huge bubble. So I’m sitting and watching.

If the market doubles in the next six or eight months, which it’s done in the past, then I’d have to start thinking about selling short...[But] because of the uncertainty – at least in my mind – I’m not doing anything.

He's not moving on gold, either. Many investors believe gold has hit a low at $1,300, but Rogers believes it’s still not at its lowest. He says it won’t bottom out until the faithful are washed out, and that’s not going to happen because they believe gold is money.

According to Rogers, gold is only money if he can walk into a store, hand over gold, and buy something with it.

He does believe gold will rise though. If the U.S. goes to war, oil and gold will rise, which he owns. So it’s safe to say that while gold isn’t a saving grace right now, it can make investors money in the future.

Just be careful right now with investments of all types. The economy is getting ready to face a catastrophe, and the effects will be shown across many types of investments such as stocks, commodities, gold, etc. Rogers says he is “sitting and waiting,” and that’s probably what all investors should do right now.

 

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