Jim Rogers, 75, says the next equity bear market will be more catastrophic than any other market downturn that he has lived through.
The veteran investor says that is because even more debt has accumulated in the global economy since the financial crisis, especially in the US.
While Rogers is not saying that stocks are poised to enter bear territory now — or making any claim to know when they will — he says he is not surprised that US equities resumed their sell-off on Thursday and he expects the rout to continue.
“When we have a bear market again, and we are going to have a bear market again, it will be the worst in our lifetime,” the chairman of Rogers Holdings Inc said in a telephone interview. “Debt is everywhere and it’s much, much higher now.”
The plunge in equity markets resumed on Thursday as the S&P 500 sank 3.8 percent, taking its rout since a Jan. 26 record past 10 percent and meeting the accepted definition of a correction.
The Dow Jones Industrial Average plunged more than 1,000 points, while the losses continued in early Asian trading yesterday as the Nikkei 225 Stock Average fell 2.32 percent, or 508.24 points, to close at 21,382.62.
Over the week, it has lost 8.13 percent.
Rogers has seen severe bear markets before.
Even this century, the Dow plunged more than 50 percent during the financial crisis, from a peak in October 2007 through a low in March 2009.
It sank 38 percent from its high during the information technology bubble in 2000 through a low in 2002.
“Jim has been talking about severe corrections since I started in business over 30 years ago,” said Alibaba Group Holding Ltd (阿里巴巴) president Mike Evans, a former Goldman Sachs Group Inc banker. “So I’m sure he’ll be right at some point.”
Rogers forecast that stock markets would experience jitters until the US Federal Reserve increases borrowing costs.
That, he says, would be the point when stocks go up again.
He said he would buy an agriculture index today, reiterating his view that prices of such commodities have been depressed for some time.
“I’m very bad in market timing, but maybe there will be continued sloppiness until March when they raise interest rates and it looks like the market will rally,” Rogers said.
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