Sunday, July 1, 2012

Jim Rogers: Short Stocks, Go Long Oil -

Jim Rogers' advice amid all the global economic turmoil: Short stocks, consider commodities and to heck with European bailouts.
A day after the billionaire investor told CNBC that the Spanish bailout was "absurd," he amplified on his point that letting any country go bankrupt wouldn't be the worst thing.

"New York City went bankrupt, the world didn’t come to an end. Mississippi went bankrupt once, the world hasn’t come to an end. Detroit’s bankrupt, the world hasn’t ended," Rogers said Tuesday on CNBC's "Closing Bell."

So if banks in ailing Spain and Greece go bankrupt, bondholders and bankers will lose money, he shrugged.
"What happens is you reorganize and you start over. It’s been happening for a few thousand years. There’s nothing new about it."
Had the U.S. not let Lehman Brothers fail at the start of the 2008 recession, "we would still be suffering," he said. "They would still be bailing out everyone in sight."
His strategy in the event of a global selloff: Sell short.

"I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two. That’s how you protect yourself in times like this," he said. "What they’re doing is they’re making this situation worse."
Because bailouts and printing money only add to the debt burden, Rogers said.
"What I see happening is more and more bailouts, higher and higher and higher debt," he said. "We’re going to have a worse recession next year and 2014 because the debt is high. ... In 2007 and 2008, the recession was worse because the debt was higher; 2013 and 2014, the debt is up to the ceiling. The recession is going to be worse. This is not going to be fun."
Rogers sees oil as a good investment over the long haul.
"The price of oil may well go down for a while. China is slowing down, India is slowing down, a lot of places are slowing down," he said. But "over a decade the price of oil is going to go through the roof. The surprise is going to be how high the price of oil stays and how high it goes. That doesn’t mean it cannot go to $70 in the meantime. But if it does, you should buy a lot of oil."
And gold "If it goes down, I’ll buy more," he said.
But would he buy stocks?
"Not that I can think of," he said. "If stocks collapsed around the world I would have to buy a lot more stocks. I would buy stocks again, but I don’t see that happening. I’m telling you, the economy is going to be bad next year. Why buy stocks in the face of something like that?"

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Jim Rogers

Warren Buffett

Nouriel Roubini