Stocks are up in 2023 after experiencing a bear market in 2022. But according to legendary investor Jim Rogers, the next downturn could be more painful.
In a recent interview with Real Vision, Rogers explained why his prospects are so bleak.
“[In] “In 2008 we had a bear market because of excessive debt,” he said. “Look out the window, debt has skyrocketed everywhere since 2008.”
And that doesn't bode well for investors.
“It's a simple statement that the next bear market will be the worst of my life because debt has increased by such incredible amounts over the past 14 years.”
Rogers has extensive experience in using market volatility to his advantage. He co-founded the Quantum Group of Funds with George Soros in 1973 and played a key role in steering the fund through several market downturns and economic crises in the 1970s and 1980s.
Here's a look at where he currently sees threats and opportunities.
Rogers argues that rather than temporary ceilings on America's gargantuan debt problem, Washington should focus on figuring out how to deal with the ever-growing debt mountain.
“Every country in history that got into this situation had serious problems at some point,” warned the 80-year-old market veteran. “And so will we.”
The US debt problem could mean problems for the country's currency as well.
“You should be very worried because if you don't, you don't know what's going on,” he said. “Many countries are starting to look for alternatives to the US dollar, also because of its horrendous debt problems.”
Speaking to a group of emerging fund managers during the Fund Launch Live event in May, Rogers said: “No world currency has been at the top for more than 100, 150 years – they all change. We've been at the top for a while, and now there are reasons to look for a competitor to the US dollar.”
Rogers is also on guard as he sees “something bad” happening in the forex markets in the next two to three years.
Rising price levels made headlines last year. Rampant inflation comes as no surprise to Rogers, however.
“Throughout history, whenever everyone printed money or boosted the economy, it always led to inflation,” he said.
Inflation erodes the purchasing power of your hard-earned money, but here's the good news: Rogers also offers a way to fight inflation — real assets.
“The best place when there is inflation is in real assets, and real assets are commodities,” he said.
Specifically, Rogers revealed he owns silver and said he'd buy more metal “if it keeps going down.”
Farming might not seem as exciting as artificial intelligence or cryptocurrency, but it is an integral part of the economy and society. Without it, there would be no food on people's plates.
Rogers notes that the segment has yet to gain significant momentum, which could create opportunities.
“Farming has been a disaster for years,” he said. “And usually when you buy a disaster, things go well.”
Investors can invest in agriculture through exchange-traded funds (ETFs) like the one Invesco DB Agriculture Fund (NYSE:DBA).
Agriculture can provide growth and diversification opportunities due to the steady demand for food. Another area investors might want to pay attention to is housing – because food and shelter are basic human needs.
Billionaire investor Stanley Druckenmiller recently pointed out that “housing appears to have fallen dramatically given the 500 basis point rate hike.”
But this is not a downfall, because he stated that there is currently “a structural shortage of single-family houses”.
“So if things got bad enough, I could actually imagine that housing — which is pretty much the last thing you would intuitively think about — could be a big beneficiary on the way out,” Druckenmiller said.
No matter how bad the next bear market is, people will always need housing and an increasing number of people are renting rather than buying. These days, there are even opportunities to invest in rental properties from as little as $100.
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This article You Should Be Extremely Concerned: Jim Rogers warns the next bear market will be the “worst of his lifetime” points to a bigger crash than 2008. Here's What He Owns Now originally appeared on Benzinga.com
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