‘If I had Apple and Tencent, I would have sold them by now,’ says Jim Rogers
- In a freewheeling chat with Business Insider India, commodities guru Jim Rogers explained how stocks, bonds and properties across the world are in a ‘bubble’.
- While Rogers is sitting out this bubble at the moment, he said that if he had bought Apple and Tencent stocks before, he would have sold them by now.
- Instead, Rogers would rather invest in agriculture and silver commodities, which he believes are ‘very, very cheap right now’.
- He is also scouting for some good opportunities to invest in the Indian tourism sector.
“If I had bought Apple and Tencent, I would have sold them by now,” said Jim Rogers in an interview with Business Insider India, reiterating that the value appreciation they have shown in the last year is merely a bubble. While Apple’s share price increased by nearly 80%, Tencent’s rallied by over 40% last year.
Here’s how some of the global tech companies have performed in 2020:
|Company||Current share price||Performance in 2020|
Source: NASDAQ, HKEX
However, it's not just the tech stocks that are in the danger zone according to the investment guru who wrote a book called Street Smarts amongst other things. “Stocks around the world are at an all time high. Bonds have never been this expensive. Property in many places is very expensive,” he explained that a bubble has been slowly enveloping many asset classes amidst this pandemic.
‘Bubbles do crazy, crazy things’
Low interest rates mean low cost of money. That has led to excess money in the hands of investors who have made all kinds of bets leading to a rise in the price of assets across the board, including some very risky ones.
“This is a bubble. Bubbles are crazy. I don’t like to invest in bubbles,” he said.
The COVID-19 pandemic, and the economic crash that followed, has further pushed interest rates lower across the world.
Here are the five countries with the lowest interest rates:
Source: Investopedia, as of November 2020
Interest rates usually go in the negative zone when there is an economic recession or deflation. In these cases, instead of lenders, borrowers are credited interest. This is done to encourage lending and spending money instead of hoarding it.
Here’s what Jim Rogers would invest in
So, what are the few areas that are left outside this bubble? The answer is commodities — sans the most popular investment favourite — oil. Rogers believes that non-oil commodities are ‘still very cheap’ and could provide great returns going ahead, noting that now is the right time to buy commodities.
“I would probably be buying agriculture commodities tomorrow, or today, depending on what happens,” he added.
While lumber has taken off in 2020, the other not-so-popular commodities like iron ore, soybean meal and others have a long way to go.
Here’s a look at how the top five commodities have performed:
|Commodity||1-year performance||5-year performance|
Source: Markets Insider
Oil prices will rise again
“Oil is down a great deal, it is cheap, like silver which is down 50%,” Rogers said. Crude oil has had a turbulent run last year due to the extreme vagaries of The Great Lockdown.
Advertisement“In my view, oil is making a complicated bottom and in a couple of years, it will start going higher again. Known reserves of oil are in decline, fracking supply is greatly reduced,” he said. He believes that oil prices will start to shore up in 2023-24, with the possible triggers being a war or just an eventual decline in oil supplies.
Indian tourism could be one of Rogers’ bets
Rogers also added that he believes that a sector, which had hit a rock bottom in 2020 could only go up from here — travel and tourism.
Advertisement“India is already a great tourist destination, but it could be even better. Asian travel is going to be one of the great markets of our time,” he added. What’s more, Rogers himself is scouting for some good opportunities to invest in the Indian tourism sector.
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