Jim Rogers tips for new investors in a bear mkt

“Stock assets are collapsing everywhere. But , when there is a lot of pessimism, that often leads to a big rally if some good news comes. I do not know but maybe there will be peace in Ukraine, who knows? Then we will have a big rally but that will be the last rally,” says Jim Rogers, Author, Street Smarts: Adventures on the Road and in the Markets.

How do you make sense of the madness which is happening in the world?

It is interesting that the Indian market is calm today compared to what is going on in the rest of the world. That may mean a rally is coming. You have had a huge drop and often that leads to a rally, I have no idea.

Crypto currencies have melted and there is a fear that interest rates will move higher and that will slow down the economy more. What kind of narrative do you think is at play here? One side is fear and the second side is a genuine compulsion of unwinding?

Stock markets have been going up for 12 or 13 years, which is the longest in American history. So, we are certainly overdue for a problem. We do not have to have one but inflation is coming back. Stocks in many countries were extremely high, bubbles were developing. Interest rates had to go up. Things were overdue for a bear market. I am not trying to scare people or something, but we have always had bear markets throughout history and we will have them again and we are getting very close.

I see a lot of pessimism in the world right now that could lead to a rally if some good news comes but if we are going to have a bear market again and it is coming soon and it is going to be very, very bad.

Honestly there seems to be just one trade which is working out and that is long dollar. Do you sense that in this bear scenario that trade would continue to hold and we will continue to see the dollar appreciate as opposed to any other asset class?

I own a lot of dollars not because it is a sound currency, but because when there is turmoil, people look for a safe haven. Many people think that the US dollar is a safe haven, it is not. But people think it is and that is why I own it and if the turmoil comes, more and more people will rush to the dollar to be safe. The dollar will get overpriced and could turn into a bubble. I hope I am smart enough to get out.

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The other thing we were discussing is that everything in the world is falling down except for crude prices that continue at $120-$122. For India at least or for that matter for the rest of the world, that does not solve anything. What is your view on crude? When will we see a meaningful correction?

It does not help many countries when the price of energy goes through the roof. Unfortunately known reserves of energy are in decline worldwide and many countries have closed down coal mines, nuclear power and so we have to have a bull market in crude because people do not have any choice. I would expect this bull market in crude to last longer than most of us expect. Eventually, more suppliers would come on stream and people open nuclear power plants and coal mines again. But in the meantime we do not have any oil.

But if we are in for a slowdown, then demand also has to come down. With the exception of oil and coal, all major commodities have corrected?

Well look out of the window; stocks assets are collapsing everywhere. People cutting back exposure dramatically, but as I said, when there is a lot of pessimism, that often leads to a big rally if some good news comes. I do not know but maybe there will be peace in Ukraine, who knows? Then we will have a big rally but that will be the last rally.

If the Fed suddenly hikes rate by 75 bps, will that scare the market or will that make the markets happy that they have bitten the bullet?

That might be perceived as good news by the market because they will say the worst is over. The worst would not be over but the market might perceive that for a while because there is so much pessimism right now.

I am going to go back to that opening comment of yours that we are in a bear market and we are in a bear market after a 10-12-year long bull market. If we are in a bear market and since the bull market and bear market coexist, are we in for a five-seven year long bear market?

This is going to be the worst bear market in my lifetime. We had a bear market in 2008 because of too much debt and debt everywhere has skyrocketed since 2008. It is gigantic in Japan or Europe or America. Even India’s debt has gone up. So no, this has to be the worst bear market in my lifetime and it will go down a lot and it will last for a long time.

Do I like it? No, of course not. But I have to deal with reality and there is a staggering amount of debt in the world now.

If we are in the grip of a bear market, what would your advice be to investors? Cash holding worldwide are surpassing what it was during the Global Financial Crisis (GFC). Back home in India, in the last two years lots of first-time investors have entered equity markets.

That always happens at the end of a bull market all over the world. It is not just in India that we see lots of new people coming in and getting excited about how easy it is to make money. They think it will last forever.

This is not my first rodeo. I have seen this movie before. This is what happens and as a lot of new people come in, my only advice is invest in what you, yourself know a lot about. Do not listen to TV or other people, save what you know and then you might survive. Listening to hot tips will ruin you.

About two-three weeks ago you said you wished you had bought the Bitcoin 10 years ago but since 2017, in all your interviews you talked about how it is all bubbles and you would not go near it. Has Jim Rogers changed his mind when it comes to cryptos and Bitcoin?

No, not at all. What I said was I wish I had bought it when it was $1. Doesn’t everybody? It went to $60,000. I wish I had bought it when it was a dollar or $5, etc, that does not mean I have changed my mind about what is going to happen with cryptos. I do not own any, I am not going to buy any as they come down but I certainly wish I had bought it at $5. I have a lot of money now but that does not mean I have changed my mind and think it is going to change the world.

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Harry Byrne

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