Jim Rogers predicts the next bear market will be the worst in over 70 years

Famed investor, author and market analyst Jim Rogers discusses the impact of the COVID-19 vaccine rollout, Chinese wine stocks, the bond bubble, why he is bullish on commodities, allegations of currency manipulation and how Aussie investors can get ahead.

Katrina Bullock: Hello. Katrina Bullock for the Finance News Network. Joining me today is famed investor, author and market analyst, Jim Rogers. Jim is perhaps most well known for co-founding the Quantum Fund, a fund which gained 4200 per cent during the '70s while the S&P advanced only about 47 per cent. Jim, it is so lovely to have you back on the network.

Jim Rogers: Katrina, I am delighted to be here. It's been a while since I was on FNN. I'm delighted to be back, and especially with you.

Katrina Bullock: Absolute pleasure, as always. Now, first up, how do you think the vaccine rollout will impact markets in the Asia-Pacific region?

Jim Rogers: Well, people will think that the vaccine is going to calm things down and make economies restore themselves. It may well happen, but it's certainly going to take a while. First of all, it's going to take a long time for people to get the vaccine. I live in Singapore, a country with 5.5 million people. It's going to be at least two quarters, maybe three, before everybody gets it here, and we're a small place. So, it's going to take a while.

Katrina Bullock: Now, while we're talking about Asia, I know you've invested in Chinese wine stocks. And I have to give you credit because you've been bullish on them for a long time, even before we saw the Chinese government slap Aussie exporters with huge anti-dumping tariffs, tariffs which I'm sure only serve to increase domestic sales and raise valuations. So, do you think it's still a good time to invest in Chinese wine stocks, or have investors missed the boat?

Jim Rogers: Well, they've certainly started going up for some reason, and I presume that the tariffs on Australian wine is part of the reason. But no, Katrina, most people don't know there are Chinese wine stocks. And eventually I hope everybody knows there are Chinese wine stocks, and then I will sell. But no, as far as I can see, they've got a long way to go.

Katrina Bullock: I know you have a bullish outlook on commodities as well. You know, silver, agriculture, oil and now energy. So what's the rationale behind your optimism?

Jim Rogers: Well, Katrina, as I look around the world, most stocks in many parts of the world are either at all-time highs or very, very strong. In Japan, they are the highest they've been in 31 years. So, stocks are going up. Bonds are certainly in a bubble. Bonds have never been this high in the history of the world. Property in many places is very strong — Seoul, London, many places. That's a bubble. Sugar is down 75 per cent from its all-time high. Silver is down 40 per cent, 45 per cent. These things are not overpriced and certainly possibly very cheap.

Katrina Bullock: Now, Jim, you mentioned recently that you're limiting your exposure to bonds because you believe they may be in a bubble. I'd love to hear a bit more about that. Firstly, what type of bonds are we talking about? Is it US treasury bonds, Aussie government bonds, corporate bonds, all of the above? And why do you think a bubble is occurring?

Jim Rogers: Nearly all bonds. In fact, I cannot think of any bonds that are not in a bubble. Treasury bonds in the US are the lowest they've been in history. In Japan, there are negative interest rates. Parts of Europe, there are negative interest rates. Even in China, China still has interest rates, but they're the lowest they've ever been. So, it's pretty simple to me. When things are the lowest they've ever been in the history of the world, that's usually a bubble.

And even junk bonds. In junk bonds, the spreads between high quality and low quality is the lowest ever. People are desperate to buy yield, and they're paying any price for it. Now, there are some bonds that are better priced. Russian government bonds in rubles still have yield, but they're very expensive on a historic basis.

Katrina Bullock: Now, just yesterday, the US Democrats secured the balance of power in the US Senate. We're heading into 2021 with the rollout of the COVID vaccine. We have President-Elect Joe Biden, who will take office in just a fortnight. So, with all that in mind, how do you think the US share market will perform in the year ahead?

Jim Rogers: Well, I suspect that it will go up for a while because Mr Biden and all of his friends love to spend money, love to print money, love to borrow money. And the markets like that, obviously everywhere. And the same is happening in Japan, everywhere. Korea, Europe, everywhere, they're all borrowing and spending and printing a lot of money. And markets like that, at least for a while.

Now, Katrina, if you give me $10 trillion, I'll show you a very, very good time. Now, we'll have a very good time for a while, but eventually somebody is going to wake up and say, "Oh, what about all this debt? What do we do now?" But that's not this month. That's later.

Katrina Bullock: I was reading an article last night where you projected that the next bear market will likely be the worst in at least 78 years. Why?

Jim Rogers: Well, Katrina, what I said was that the next bear market is going to be the worst in my lifetime, and that's pretty simple. We had a bad problem in 2008 all over the world because the debt everywhere was too high. Katrina, since then, the debt all over the world has skyrocketed. The US has, every month, trillions we've been adding. Even China now, China didn't have much debt 20 years ago, but now even the Chinese have a lot of debt.

So, the next time around, it's got to be the worst in my lifetime. It's pretty simple. Now, we have bear markets every few years. We always have. And economic problems every few years. We always will. I will have to hasten to tell you that the new Treasury Secretary in the US says, "No, no, no, we'll never have problems again."

So if you believe her, her name is Janet Yellen. She has degrees from fancy Ivy League universities. If you believe her, then don't listen to me. But I suggest to you that we will have more economic problems in the future. I don't know when. Watch FNN. But when we do, it's going to be horrible because there’s debt everywhere. Katrina, Japan, it is unbelievable what they're doing in Japan, how much they're borrowing, spending and printing. I mean, I own Japanese ETFs because the Bank of Japan, he goes to work every day, prints money as fast as he can and buys ETFs and stocks and bonds.

Well, Katrina, he has more money than I do. If he's going to buy Japanese ETFs, I am too. So, this sort of thing is happening. It's madness. It's great for the moment, but Katrina, when the problems come back, it's going to… Katrina, I'm older than you, so it's going to be the worst in your lifetime too. It's not going to be fun. Cannot be.

Katrina Bullock: Recently, US President Donald Trump accused Switzerland, China and Vietnam of manipulating their currencies. What's your comment on that and the impact of currency manipulation on the global economy?

Jim Rogers: Throughout history, when there are problems in a country, the politicians always blame foreigners. It's very easy to blame foreigners. They have different skin, different language, different food, different dress, different religion, different everything. And so, in Washington, they're blaming foreigners again. Mr Trump would never say he made a mistake. Mr Trump is the smartest President we've ever had in the history of the United States — and in the history of Australia and the history of everywhere. So, that is what's going on.

Now, yes, and the new guys will do the same thing. They will blame currency manipulation. There is no question that every government in the world, including Australia, is printing a lot of money right now. And then the US. If anybody is manipulating their currency, it's the United States, because we're printing more than… Well, not more than Japan, but more than nearly anybody. And so are the Swiss.

So, when he starts blaming other people, it's just the typical politician trying to get reelected. Maybe the Vietnamese are manipulating their currency. If so, not in a big way that I can see anyway. Likewise, the Chinese have let their currency float to some extent. Nobody has a free currency. Well, Australia does. A few places do. But most countries do try to control their currency, which is insane, if you ask me. But as far as Mr Trump, that's really just blaming other people for our problems, our problems being the US. The direct answer to your question is if you print a lot money, it affects financial markets. That was your specific question. But everybody's doing it. Everybody is doing it.

Katrina Bullock: And lastly, Jim, what tips do you have for Aussie investors to help them get ahead as we move into 2021?

Jim Rogers: Well, first I would say to any investor, only invest in what you yourself know a lot about. Don't listen to somebody you see on the TV or on the internet, unless it's Katrina maybe or FNN.

Katrina Bullock: Except FNN, yeah.

Jim Rogers: Yeah, you can listen to Katrina, but don't listen to me or other people. If you want to be successful, invest only in what you yourself know a lot about. Now, I know you're going to say, "No, that's boring, boring. I want a hot tip. I want to be rich this week." Well, hot tips will send you to the poor house. Hot tips will ruin you. So, just stay with what you know.

Everybody watching this, Katrina, knows a lot about something, whether it's sports or cars or fashion or something. So, just stay with what you know. And when you see something that's going to work and you know it's going to work, do some research and maybe make an investment. And then, by the way, you can send me an email too. And then I'll do my research and find out about it.

Katrina Bullock: Jim Rogers, thank you so much for your time and insights today. Really, really appreciate them.

Jim Rogers: Thank you, Katrina. It's my pleasure. Watch FNN and tell me when the next bear market starts. Okay? Thank you. Bye-bye.

Katrina Bullock: Thank you so much, Jim. That was wonderful.

Source: Finance News Network