Maverick investment guru Jim Rogers, who has a pessimistic view on the state of developed economies and what is being done to counter the recession, is not buying into equity and commodity markets at this stage. Rogers attributed the recent run-up in equity markets to the various stimuli packages released around the world. On commodities, Rogers said he owned base metals and — among precious metals — gold but wouldn’t buy those at current levels, given the recent rally in commodities.
The long-term call on the dollar was that it would be “a disaster,” Rogers said, but added that he was positive on the Japanese yen.
Rogers, who last year shifted base from the US to Singapore, said he was long-term positive on Chinese equities. Among other emerging markets (EMs), Rogers said he wouldn’t buy anything in the Russian market, though Brazil, which was a natural resource-rich country, looked better managed now, while the Indian stock market looked expensive due to its recent rally. “Most EMs have been very strong in the past year after the collapse or the fall of 2008, most EMs have gone up a lot. I don’t like to buy anything that has gone up a lot,” he said. “I am very worried about the Western economy, I don’t think that the problems are solved in the West and if you start seeing more problems in the West, it is going to have an effect on most markets around the world as certainly some of the EMs. The EMs, which have a lot of raw materials or commodities, would probably do better than the others but again even they will be affected if we have more problems in the West.”
Here is a verbatim transcript of Jim Rogers’ exclusive interview on CNBC-TV18. Also watch the accompanying video.
Q: It has been a big run for equity markets first and foremost, what have you made of it?
A: The governments around the world are pouring huge amounts of money into the world economy. It has to go somewhere and the easiest, best way for it to go is in the financial markets.
Q: It has also concomitant with a big fall in the dollar and there is a call now for greater weakness in that currency, would you concur?
A: I am not optimistic about the US dollar long-term. In fact, the US dollar long-term is going to be a disaster. However, there are many people in the world right now who are terribly pessimistic about the dollar including me, many people have sold the dollar short, and so it would not surprise me if there were not a big rally. If a rally comes, I plan to sell that rally but I am not selling the dollar down here.
Q: What is your call on the strength that the yen has seen and the kind of a nervousness that most of those export-oriented markets are exhibiting? Where do you see it headed from here?
A: I own the yen so I am very pleased to see the yen going higher. Various things are happening in Tokyo and Japan. They are the second largest creditor nation in the world plus their government has given big incentives for people to bring the yen back into Japan. Billions of yen have been invested outside of Japan and now there is good reason for them to bring it back.
So you have a new government [in Japan], you have incentives to bring the yen back, you have the carry trade unwinding, there are many reasons for the yen to continue to go higher. I own the yen and I hope it does go higher.
Jim Rogers has taught finance at Columbia University’s business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.