In 2024, the US stock market performed strongly, with both the S&P 500 and the Nasdaq Composite Index recording double-digit gains since the beginning of the year. However, renowned investor Jim Rogers has issued a warning. #Market Outlook for the second half of 2024#
In an interview with ET Now, Rogers expressed extreme concern about the future.
Rogers pointed out, "Since 2008 and 2009, the US has not experienced a problem - this is the longest time in US history." He said, "The US, as well as the world, should have faced problems long ago."
In the face of such dire predictions, reevaluating asset allocation may become a key concern for ordinary investors. For Rogers, this means prioritizing holding cash.
"I have a lot of cash. The reason I hold a large amount of cash is because I expect the next market sell-off to be the most severe in my lifetime, as global debt has risen sharply," he said.
The rise in global debt, especially US debt, further supports his concerns. According to the latest fiscal data, US national debt has now reached 35.21 trillion US dollars.
Hoarding cash
Rogers is experienced in dealing with turbulent times. He co-founded the Quantum Fund with George Soros in 1973, during a severe bear market. From then until 1980, the investment portfolio returned 4200%, while the S&P 500 index only rose 47%.
In the interview, Rogers mentioned that although he holds a large amount of cash, he is not eager to invest it into the market.
"I haven't spent my cash yet. I want to have more cash because, again, it will be the most serious one in my life when the next market crash comes," he emphasized.
Rogers is not the only well-known investor holding cash.
Warren Buffett's Berkshire Hathaway also holds a large cash reserve. According to Berkshire's latest quarterly report, as of June 30, 2024, the company's cash and cash equivalents reached $224.2 billion, an increase from $121.8 billion in 2023.
However, there may still be some areas in the market with profit potential.
"If I were to buy today..." Buffett's accumulation of cash does not necessarily indicate a bearish view. But for Rogers, his strategy is based on concerns about the sustainability of the ongoing bull market.
"Everything has always been very good everywhere. In history, it has always been a time to worry when everyone is making a lot of money, so I am worried," Rogers explained.
Despite his cautious attitude, Rogers pointed out that there are still some potential opportunities in the market.
"If I buy today - and I haven't - I might buy silver or agriculture," he revealed.
Gold and other precious metals, such as silver, are often considered safe-haven assets against inflation because they cannot be printed by central banks like fiat currencies. In 2024, gold attracted a lot of attention from investors, driving its price to new highs.
Although silver has also experienced an upward trend this year, it is still far below its historical highs. Rogers pointed out that this difference is a key reason for his interest in the metal.
"Silver is 40% or 50% below its historical high... Gold has reached a new all-time high," he said. "It's hard to find something that is experiencing a price decline like silver."
Rogers' interest in agriculture follows a similar logic.
"I am optimistic about agriculture because it has been in a downturn," he pointed out.
Although agriculture is not frequently discussed in financial media, it plays a crucial role in the global economy. After all, food is a necessity, and investing in agriculture can be a way to take advantage of an industry that remains essential throughout economic cycles.
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James Beeland Rogers Jr. (born October 19, 1942) is a renowned American investor, economic analyst, traveler, university professor, and writer, co-founder of the Quantum Fund with Soros, and famous for his investment in commodity futures, earning him the title of 'commodity king'.
At the age of 26, Rogers ventured into Wall Street alone and co-founded the global top hedge fund, Quantum Fund, with Soros. Over a period of 10 years, he achieved an astonishing 42-fold return, accurately predicted the 1987 global stock market crash and the US subprime mortgage crisis, earning him a place alongside Buffett and Soros as one of the world's top three investors.
Even the legendary Warren Buffett once attended his lectures and praised his ability to grasp the overall situation like no other. Rogers' wisdom and judgment are derived from his experiences 'on the streets and in the lanes': in his 80s, Rogers has traveled the world twice, visited China four times, seizing opportunities while traveling and taking advantage of the world.