Jim Rogers on why market wants to have Trump back as US President

'There's a bubble developing in different parts of the world. Some of the US stocks that seem to never go down currently, are going to go down a lot some day and many people are going to suffer. '

ETMarkets.com
One of the world’s best known investment gurus, Jim Rogers expects Donald Trump to win a second term at the upcoming US elections, and believes markets will be happier if he is re-elected as the President. Rogers is bullish on gold and silver, and believes the precious metals will record new highs.

Which party’s win in the US elections is more conducive for the equity markets? Would Donald Trump win again, or will it be Joe Biden’s turn?
I would suspect that Trump will win because historically it is very difficult to dethrone the President in power. It has happened, but rarely. It is probably because if the man in charge needs votes in a certain area, he goes and spends a lot of money there. The opponent cannot do that and so usually the people in power keep power. It might change, but if I were betting and I am not, it would be on Trump. It is not an endorsement, but just a historical fact.

Will the market be happier if Trump wins, or will it rejoice if Biden wins?
I think the stock market will probably be happier if Trump wins because Biden has said he is going to raise taxes a lot and no investor, no economy likes more taxes. Taxes take money away from investment and spending. So, again markets do not like taxes. Investors do not like taxes. Economies do not like taxes. So I suspect that the market will prefer Trump.


What is at stake in these elections and what is a key theme that could emerge for the markets if either party wins?
Both parties have said several times that they are going to smash foreigners especially China as a way to win the election. It is very clear that the Democrats and the Republicans will use other things now such as the virus that people are talking about and the violence on the streets. That said, both parties have said that they are going to attack China as a way to win the election and you will see more of it. Is it good? No. It is not good for the world or America, but that is what politicians do.

Given the anti-China sentiment, where is it in your preference list and how do you think China as an investment destination will pan out going ahead?
China so far has been certainly restrained. I have been delighted to see it. You would think that normally if a country is getting smashed, then they would react strongly. We certainly see signs that China is closing off more and more. The whole world is closing off more and more unfortunately. I hope that after the election, things calm down and China does not close off more. I would say nobody closes off more because throughout history when countries have opened, we have had more prosperity and good times. But we have had periods in world history when people have closed off. It has led to problems. I see America closing off obviously. China has closed off more in the past few months. I hope it does not happen.

Are we staring at a deep correction in a run-up to US elections?
Well, markets usually discount US elections and so I would suspect that we will eventually have a serious selloff. That usually happens closer to the elections or after the elections depending on who wins the election. This is not going to last forever. You never had the United States stock market at its all-time high despite huge debts and huge problems. So this is going to end some day and the question is whether it will end this year or next. I would suspect that certainly by next year it will end. I do not think this is going to last forever.
It is my view that when there will be less and less confidence in governments and central banks, gold will go up. Gold has already made new highs and silver will make new highs too in my judgment

-Jim Rogers


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What is at stake for the Emerging Markets with the US elections coming up? How do you see EMs fare?
Emerging markets are going on for the ride because there is so much money being printed nearly everywhere and spent. The money has got to go somewhere. They were also beaten down a lot. We are seeing emerging markets rallying too. You see what is happening in India. Everyone is investing in India now. It is hot.

Where does India stand in your emerging market preference list currently? Last year when we spoke you were not invested in India. Are you invested in India currently?
I am not. I wish I were. Probably because of laziness, and over the past few months I have been doing other things. Clearly, anybody who is invested in India has been very smart and very wise. I do not know if they have been smart, but they have been wise.

We are in an interesting environment currently where the pro risk asset classes such as equities are rallying while an anti risk asset class like gold has delivered robust returns. What explains this and do you think this trend is here to stay?
I stopped buying gold around 2010 and in 2019, I started buying gold again. I still own gold and I am still buying gold and silver, actually more silver than gold. Throughout history, when people lose confidence in currencies and governments, they have always bought gold and silver. We are in a period like that again. It is my view that when there will be less and less confidence in governments and central banks, gold will go up. Gold has already made new highs and silver will make new highs too in my judgment. People everywhere are losing confidence in money, as they are printing staggering amounts of it and losing confidence in governments and so in my view, gold and silver are good places to invest now. I will be buying more as we go along.

Is this the asset class that appeals the most to you now?
Oh, yes, yes. As I said, gold will continue to make new highs, silver is down about 45 per cent from it's all time highs. I would expect silver to make all time highs too, before this is over. Silver is certainly cheaper than gold on a historic basis. I would expect both to continue to do well because the world is going to have problems in the next few years.
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Are you fully invested in this market?
I have a lot of investments but we are not fully invested. It is partly because I am lazier than I used to be.

If you had to allocate $100 currently for investment, what will be the allocation like and why?
I would certainly put some of it in gold and silver. I would put some of it in places like China, Japan. I would buy Japanese ETFs. I know that the Bank of Japan goes on printing money, and then buys bonds, buys other stocks, buys ETFs. So I would buy Japanese ETFs because that is what they are doing and they have more money than I do.
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I would also invest in Emerging Markets and certainly places like India if one has the expertise and knowledge. Agriculture is still very depressed. If I were not talking to you, I would probably be buying some agriculture right now.

Market seems to have priced in the best scenario in terms of an effective vaccine and even a strong economic recovery. What are your thoughts, are we pricing in too many positives? Are we eventually headed for a disaster?
We are certainly having an economic recovery. I live in Singapore and Singapore airport had closed earlier. Now, they are having a few flights and so there is a recovery and next month they will have more flights and people will say things are getting better and they are, but they are nowhere near what they were eight or nine months ago but we are certainly going to continue to have a recovery because things had disappeared, everything had closed. So yes, the recovery will last for a while.

However, we are getting ahead of ourselves. I am an American and I have three children, and the legacy that is being left for my children is a nightmare. Somebody is going to wake up in two or three or five years and say wait a minute, what about all this debt? What is going to happen now? Countries that have resorted to such measures are ultimately going to suffer. When you have huge amounts of debt, it slows down your growth,. Everybody wants to get elected in November but a couple of years from now, people are going to be saying oh, what do we do now?

You have seen many cycles in the markets. Is the current cycle really unique and different in that sense, is it something that you have never seen before?
I have not seen the whole world close down because of a virus. We have had many epidemics in history, in 2009 America had a big H1N1 virus but it did not close McDonalds, we did not close airports, we did not close flights. This has never happened before. For some reason, this time around, either politicians or academics or media or somebody panicked a lot and we started closing down the whole world. Not everybody closed though. Sweden did not close and it is in a much better shape now. They are less impacted than most of us.

Some American states did not close but most people closed down and that has had a terrible effect. I live in Singapore, which closed and it had a very bad impact. Sometimes, the cure can be worse than the disease, and I am afraid in this case the world has made a serious mistake by closing down. We will know in two or three years which could have been better but I think they got it wrong.

This rally in the world market has brought in many first time investors. There is a huge number of so-called Robinhood investors who are hitting the market, and everybody wants to make a quick buck. What is your advice to the first-time investors?
I am old enough to have seen many market cycles and I have read about many. What is happening now is there are bubbles developing in some parts of the world markets. Some American stocks never go down, they go up nearly every day and that has always turned into a bubble. It is turning into a bubble now in some parts of the world. I have seen many bubbles and read about more. We should be very careful when you see a bubble. I assure you some day a year or two or three later, people are going to look around and say oh my, why didn't you warn us?

Some of these stocks are going to go down very dramatically. The stocks that seem to never go down currently, are going to go down a lot some day and many people are going to suffer. Be careful.
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