Jim Rogers, who cofounded the Quantum Fund with George Soros decades ago, is again calling for the worst bear market in his lifetime. He has been making this same call on a regular basis over the last several years. The coronavirus pandemic is the latest fuel for the fire. Previous calls have been linked to Brexit, high levels of debt, and the trade war.
Q4 2019 hedge fund letters, conferences and more
Jim Rogers' latest call for a bear market
His most recent call for the "worst bear market in my lifetime" came in an interview with Bloomberg earlier this week. He said the combination of economic damage from the coronavirus pandemic, high debt and low interest rates that will hurt when they rise will cause the worst bear market in many decades.
Stocks have been plunging so far this year amid concerns about a recession. The first quarter was the worst since 2008 for a global gauge of emerging and developed-market stocks. Meanwhile, the world's central banks have announced emergency interest rate cuts, and governments have poured trillions into their economies.
Concerns about debt
This isn't the first time Jim Rogers has called for an imminent bear market in recent years. However, this is the first time the market has been in a major tailspin when he made the call.
Jim Rogers said a bear market was imminent in 2018, and his worries have increased since then. Businesses that have taken on cheap debt are now up against new problems due to lockdowns and travel bans. He added that the impact of the coronavirus on the world's economies "will not be over quickly because there's been a lot of damage. A gigantic amount of debt has been added."
He noted that whenever there is economic distress, investors flee to quality companies because they have low debt and don't have to worry about bankruptcy. He also said companies with a significant share of their market also do well unless they are extremely leveraged.
During this coronavirus-driven downturn, Rogers is holding U.S. dollars and some Russian and Chinese stocks. He's considering some Japanese stocks and waiting to grab shares in some of the most troubled sectors like airlines, tourism and transportation.
Jim Rogers' other calls for a bear market
He also told Kitco News that a bear market was imminent in 2019, saying that it would be "horrible, compounded by too much debt and a trade war." At the time, he said this year or next year, the trade war would return, and "it's all over." He placed a great deal of emphasis on the trade war last year and said President Trump liked trade wars and believed he could win trade wars.
In 2017, Jim Rogers again called for "the worst" bear market in a "lifetime." At that time, he told RealVision TV that the high level of debt seen across global economies would be to blame for the "horrendous" bear market. He also said that investors in exchange-traded funds would be especially hurt by the decline because ETFs hold the same things "everybody owns."
In 2016, his big concern was the impact Brexit would have on the rest of the world. He told Yahoo Finance it would cause a bear market that's "worse than any bear market you've seen in your lifetime." He again referenced the high amount of debt in the world. There's even more debt now than there was then.
He also predicted a crash in 2012, 2013, 2015, and probably some other dates we missed.
