Local time on Friday, legendary American investor and “Commodity King” Jim Rogers stated that even though the Federal Reserve is expected to cut interest rates, the global economy is still struggling and the upward trend of US stocks over the past decade may be coming to an end.
Rogers, who co-founded Quantum Fund with George Soros in the 1970s and is known for his investments in commodity futures, has been referred to as the “Commodity King” along with Warren Buffett and George Soros as three of the world’s top investment gurus.
Rogers: The “good days of the world are over”.
Despite a continuous rise in US stocks over the past decade, Rogers is not optimistic about its prospects: “This rally has been one of the longest-lasting in US history… but for me, it means that it may soon come to an end.”
Since early this year, the US stock market has been led by technology giants. However, Rogers believes that in the US stock market, “the number of rising stocks is decreasing… which usually indicates that bad times are approaching. In one or two years’ time, we will all encounter troubles.”
Rogers has always regarded US stocks as a barometer for global economy. He predicts that while there might be interest rate cuts by next year from Federal Reserve; however, this cannot prevent economic recession from gradually approaching.
For this 81-year-old investor, economic recession is nothing new. But he still predicts that upcoming economic recession within one or two years will be “the worst I have experienced in my lifetime”.
Rogers talks about Japanese stocks: They have risen too much
The Japanese stock market has already risen more than 20% this year. As of Friday’s close at 33,431.51 points on Nikkei 225 index; it was not far from its historical high point set at 38，915.87 points in December 1989.
Rogers believes that with the support of a new generation of young investors entering the market, Nikkei 225 index “may return to its historical high point”.
However, he also mentioned that he has sold his own Japanese stocks, “not because I am pessimistic about it, but because they have risen too much.”
Looking ahead, Rogers believes that Japan’s declining population and reluctance to accept immigrants cast a shadow over its economic growth. “Japan will face huge problems on its future path. But this future does not refer to next year.”
Rogers advises the Bank of Japan to stop negative interest rate policy and let the market play its role. “In the short term, negative interest rates are great. But eventually everyone will realize it. As far as I know, no country in history has achieved long-term recovery through currency depreciation.”
Fossil fuels difficult to phase out in the short term
As the “Commodity King,” Rogers also expressed his investment views on commodities. He believes that with stocks, bonds and real estate in countries like the United States continuously rising and remaining high; there are investment opportunities in some commodities because they are “the cheapest remaining asset class”.
He cited silver and sugar as examples which have dropped by 60% to 70% from their historical highs. “If you want to invest anywhere, this may be your best investment target because when governments print money you can protect yourself by holding physical assets.”
At a time when COP28 is being held globally; decarbonization has become one of the hot topics worldwide and an important factor affecting commodity markets.
Under global decarbonization trends，prices for key metals such as copper and nickel used in electric vehicles have soared while some companies are divesting from traditional energy sources such as coal.
But Rogers believes: “It takes a long time for coal elimination especially places like India where large amounts of coal are used. They will not and cannot change quickly. So, I won’t give up on coal or any fossil fuels because it won’t happen quickly. And the alternatives to fossil fuels are still far from enough,” he added that there is not enough new energy supply in the short term to replace coal and other fossil fuels.