Billionaire Jim Rogers’ Top Trades in 2016
The chairman of Rogers Holdings is buying the U.S. dollar, while shorting the U.S. stock market.
Speaking with Bloomberg, Rogers said, “I own a lot of U.S. dollars… I think it’s going to go up, it’s going to get overpriced. It might even turn into a bubble.” (Source: “Rogers: Why I Am Out of the Yen, Long the U.S. Dollar,” Bloomberg, March 4, 2016.)
Rogers reminds us that the world economies are in turmoil. In times of market volatility, investors run for cover. According to him, the U.S. dollar will be the next safe haven investment. Rogers sees a surge in the demand for the greenback in the coming days.
Bear in mind that the U.S. dollar has strengthened against almost all of its peer currencies lately, including the euro, yen, and yuan, and is continuing its uptrend.
Rogers believes the Federal Reserve might go for another rate hike this year. However, that will further squeeze the economy and the central bank will have no choice but to backtrack on its policy.
Rogers said, “The people at the Fed are bureaucrats and academics, they don’t know anything. They are going to panic…they’ll do something to loosen up again, we’ll have a big rally but that will be the end.” (Source: Ibid.)
Rogers believes the U.S. economy is long overdue for a recession. The billionaire points out that we haven’t had a recession in more than eight years now. Historically, we’ve had a U.S. recession every four to seven years.
Rogers is informed by the host that JPMorgan sees a one-third chance of a U.S. recession in 2016, a two-thirds likelihood of it happening next year, and a 100% certainty of a recession in the next three years. Countering it, Rogers said he sees a 100% chance of it happening this year.
Rogers points out that the stock markets became highly inflated last year. He notes that all the major central banks, including Europe, Japan, and the U.S. were printing staggering amounts of money in 2015. This money had to go somewhere. Rogers says the huge money supply has been redirected toward the equity markets.
Rogers reveals that he’s been shorting the U.S. stock exchange. Particularly, he shorted the four high-growth stocks that took the world by storm in 2015—the FANGs (Facebook, Amazon, Netflix and Google [now Alphabet]). Rogers started shorting these stocks in the summer of 2015, when they were touching their all-time highs.
Having kicked off his career in investing by starting a joint fund with George Soros, Rogers has built a fortune over the years. His recent short and long trades on the U.S. dollar and equities have, so far, been on the mark. If his latest prediction turns out to be correct, a U.S. economic recession might hit us before the Federal Reserve is able to preempt it.