Worst Bear Market
Accordingto the experienced investor, there will be another round of mass market melt down. His believe is that the cause will be mix of increased debts, the corona virus induced shutdown and the low interest rates (which are likely to go up if not kept in check and will contribute to the down trend if they do rise).
I expect in the next couple of years we’re going to have the worst bear market in my lifetime,” and the impact of corona virus “will not be over quickly because there’s been a lot of damage. A gigantic amount of debt has been added
Stocks have fallen since the start of 2020. The emerging virus in China, a powerhouse in terms of exports and imports, sealed off ground zero. The worry of the financial impact and the deaths across the world due to the infection rate rising led to the most worst global financial quarter since 2008, the last global economic meltdown. The emergency injection of money and drastic cuts in interests by central banks have not helped in recovering economies. This is not surprising since the financial crisis is caused by limitations of human and material movement due to the virus and resultant scare. People are in lock down or quarantined, not allowed to move out of the house unless absolutely necessary. The cash being pumped is mostly going towards making sure businesses are at ease and salaries are being paid out, not to jump start the economy. A significant (if not major) portion of the Trump administration’s 2 trillion Dollar packageis towards salaries, student loans and deferring of interests.
What to Invest in
Rogers goes on further to say that in bear markets, there are two kinds of firms that survive. Ones with low debt and can work even when debts are called. These firms are also invested by people as they have very less chances of bankruptcy. On the other end of the spectrum, high leverage ones who have a significant market share can also survive as their products and services will be still in demand, even at a very low level.
The investor says that this is also the right time to buy shares in the Chinese market in sectors that have taken the most beating. In the long term, bottomed shares of agriculture, tourism and transportation are the ones he is looking for,
The Chinese economy is opening again, people are going back to work. Factories, restaurants are opening again,” and “I am looking at life, and life is not such that we are all going to take the bus and take boats again.
Jim Rogers is regarded as one of the most prominent investors. He started his career in 1964, working for a Wall Street firm where he learned about stocks and bonds. He co founded the Quantum Fund in the 1973 and 7 years later, the portfolio had gained 4200%.