Tags: Rogers | Stocks | Roaring | Markets

Jim Rogers: I Am Wary of Stocks Despite Roaring Markets

Friday, 10 February 2012 12:59 PM

Stocks may be up this year but investors should be wary, as a sound economy isn't pumping up share prices but rather Federal Reserve meddling is inflating the asset class, says international investor Jim Rogers.

Stocks will likely rise for the rest of 2012 but a correction will come and come on hard, especially due to Federal Reserve influence.

"Things look better, but whether it is actually real or not is the question. I am worried about the U.S., especially in 2013 and 2014," Rogers tells Investment Week.

"In the U.S., they are going to continue printing money and sending out good news to win votes this year," Rogers adds.

The Federal Reserve has pushed interest rates to near zero and has flooded the economy with liquidity to stave off deflationary fears and spur stock-market gains with the hope that companies and invest and hire.

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As a side effect of such loose monetary policies, the dollar remains weak and inflationary pressures are mounting.

U.S. government bonds, meanwhile, have surged in demand due in part to fears of a European meltdown or a hard landing in China.

Investors often flock to Treasurys due to their safety and availability in times of fear and uncertainty.

For Rogers, however, the time to look for another safe harbor is now, considering the debt burden the U.S. is already servicing.

"U.S. T-bills are at historic lows. To lend money to the most indebted nation in the world is incomprehensible to me. This is a bubble."

Some high-profile investors, however, feel fears are overblown and the time to take on risk is now.

"Be 100 percent in equities," Laurence D. Fink, chief executive officer of BlackRock, the world's largest money manager, tells Bloomberg.

"I don't have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities."

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Friday, 10 February 2012 12:59 PM
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