Investment guru Jim Rogers warns savvy market-watchers to beware a surprise attack on their retirement savings.
The international investor warns another bear market is coming, and that it will be “horrendous, the worst,” MarketWatch reported.
Rogers, who co-founded the Quantum Fund with George Soros in 1973, said it’s the skyrocketing level of debt across global economies that will be to blame.
And retail investors who have been piling into exchange-traded funds will be particularly vulnerable to that next big mauling, MarketWatch reported.
“When we have the bear market, a lot of people are going to find that, ‘Oh my God, I own an ETF, and they collapsed. It went down more than anything else.’ And the reason it will go down more than anything else is because that’s what everybody owns,” the chairman of Rogers Holding Inc. told RealVision TV.
“If somebody can just take the time to focus on the stocks that are not in the ETFs, there must be fabulous opportunities in those stocks because they’re ignored,” said the best-selling author of various financial books.
“Some of them have got to be doing very, very well. And nobody’s buying them, because only the ETFs buy stocks.”
Rogers likes overlooked and hated markets — agriculture and Russian stocks — and he remains a fan of Chinese stocks. He owns gold, but says the metal isn't hated enough to buy right now and it’s going to get “very, very, very overpriced” before the current run is over.
To be sure, U.S.-based taxable-bond funds took in $7 billion during the latest week, the largest weekly intake since July, adding to an already strong year for debt against the backdrop of a rate-hiking cycle, Lipper data showed.
Even in a week with big inflows for technology stocks, U.S. fund investors continue to favor debt over equity. The Federal Reserve on Wednesday announced plans to reduce its own bond holdings, marking a historic shift from the ultra-easy monetary policy it had adopted since the 2007-2009 global financial crisis.
Taxable-bond mutual funds and exchange-traded funds (ETFs) have now brought in nearly $219 billion this year in the United States, according to Thomson Reuters’ Lipper research unit.
But that is not a bubble, said Matthew Forester, chief investment officer for Lockwood Advisors Inc., part of the Bank of New York Mellon Corp.
“Market prices should already reflect Fed decisions,” said Forester. “Debt, demographics and technology-driven disinflation all work to suppress long-term rates.”
Bond prices rise as rates fall.
Financial sector funds, which are seen profiting from higher rates, also pulled in their largest week of inflows since July, at $530 million. Real estate sector funds, by contrast, posted $407 million in outflows during the week ended Sept. 20, their largest withdrawals since June.
U.S.-based stock funds pulled in $803 million, according to Lipper.
(Newsmax wires services contributed to this report).
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