On a recent call with ETMarkets.com, no-nonsense economic guru Jim Rogers restated his concern that a bear market was on the way, and investors should be on the lookout for small signs to avoid another crisis like 2008.
Although Rogers could not give a timeline for the bear market to arrive, he did say that it will be the “worst in my lifetime,” a prediction he’s stuck by for a while now, and the key to spotting a market correction lies within smaller markets.
Via Economic Times:
How do you view US stock markets currently?
I am not investing in US stock market because I expect problems to come in the next year or two. I am not buying shares.
In the US market, some of the stocks like Apple and Google go up every day. They never go down, which is a dangerous sign in any stock markets. When you have a few stocks always going up and the movement has been concentrated and that seems to be what is happening in the US stock market.
Any timeline, any horizon that you have for this bear market that you are foreseeing?
No, I will just say it will be the worst in my lifetime. It has been over 10 years since we had a serious bear market in the United States. I would suspect by the end of this year or next year, it will start. These things always start small, where people are not looking and then they work to the major markets, and then you see them on the major news.
In 2007, Iceland went bankrupt but nobody noticed or cared. Then Ireland went bankrupt. Then a few weeks later, Bear Sterns went bankrupt and a few weeks later Northern Rock, the English Bank, went bankrupt. Then eventually Lehman brothers went bankrupt and by then, everybody knew there was a problem. But it had been there for over a year and it has always worked that way. It starts when we are not watching. It has already started. Latvia collapsed. Argentina, Venezuela, Turkey, some banks in India are having problems, Indonesia has started having problems. It has not made to evening news yet.
All these markets are small but until they make it to the big markets, people do not notice.
Rogers also told ETMarkets.com that he believes a trade deal will arrive soon between the United States and China amid escalating tariffs, but it may not mean much as even more trade wars will begin, contributing to the catastrophic bear market scenario Rogers mentioned above.
Do you think there will be a US-China trade deal soon and why?
Yes, it will because both sides need it and they both have expectations. So, yes, there is going to be some good news coming out fairly soon and we will all be happy for a while. But it will not last very long because the next time the American stock market or the economy starts having problems, Mr. Trump is going to blame that on Asia and come out with more trade wars, not just against China but against Japan, Korea and everybody because Mr. Trump in his heart thinks trade war is good. He is surrounded by people who think a trade war is good. He thinks he can win a trade war. He does not know history, thinks he is smarter than history or both.
I know he is thinking he is smarter than history and I doubt if he knows history. So, we will have more trade wars next year, the year after and that is why another reason the next time we have a bear market, it is going to be the worst in my lifetime.
Rogers goes more in-depth about Chinese, Indian and Russian markets. Click here to read the interview in full.