Sell US investment banks, US housing stocks and the dollar, avoid India and Russia and place large bets on China and commodities, investment guru Jim Rogers.
Investment guru sells US stocks, places large bets on China
LONDON: Sell US investment banks, US housing stocks and the dollar, avoid India and Russia and place large bets on China and commodities, investment guru Jim Rogers told a hedge fund conference on Wednesday.
Rogers went short — a bet on lower prices — US investment banks about a year ago. He declined to say how large his short position was, but did say that he had increased that exposure a few weeks ago.
Events over the last few months have proved Rogers right.
Problems in the subprime mortgage market earlier this year have triggered a credit squeeze, which has hit banks’ earnings in the third quarter.
“Who knows how bad their (banks) balance sheets are,” he said at the event organised by IRC Conferences. “One of the few areas of excess I see in the world is on Wall Street ... Twenty-nine-year-old kids make $1 million. They think that’s normal ... You will see those excesses washed out.”
“I shorted US housing stocks three years ago — the slump has a long way to go ... Huge bubbles don’t clean themselves out in months, they take years,” he said, adding that the dollar was taking the consequences of American excess.
“The dollar is a terribly flawed currency, the US is now the biggest debtor nation. What is more terrifying is, the US is going deeper into debt by $1 trillion every 15 months.”
Loose money was not the answer to problems in the United States and US Federal Reserve chairman Ben Bernanke is “making horrible mistakes”, Rogers said.
“There’s capitalism in Russia, but the mafia controls most of the country,” he said adding that the vast amounts of money leaving the country was an indication of problems in Russia.
“India is an extraordinary country. (But) it’s horribly bureaucratic and anti-capitalist. They have no infrastructure.”
To make money in India, investors need to have friends in the government, Rogers said. “The wind is at my back in China, in my face in India,” he said. The 21st century is going to be the century of China, he said.
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