Although it wasn’t known at the time these predictions, spoken from his home in Singapore in January, would prove to be prophetic. The markets had been enjoying a record-breaking bull run for eleven years, but by March there was a sea of red across the screens of investors and traders.
The coronavirus pandemic sent markets in the US, Europe and Asia spiralling at speeds not seen since 2008.
But a shock like this isn’t anything new to Rogers. The stock market crash of 1987 happened on his birthday, after all.
Luckily for him, he had predicted a collapse was imminent, taking out short positions at the time. However, there was no way for him to know it would be so severe. It was “the best birthday” he ever had.
Bearing down
For the past few years, Rogers has been saying that the next time such a bear market occurs, the levels of debt are going to make for a very, very bad situation.
“In 2008, we had problems in the economy and in the markets because of too much debt. Since then, debt has skyrocketed all over the world,” he says. “What surprises me is that people don’t understand that, but to me, it’s very, very simple.”
At the time Opto went to press, many were warning of a global recession. Indeed, in an effort to temper a global economic collapse, central banks and governments had been spending and printing copious amounts of money.
While the potential impact of this turn of events may be alarming to some, Rogers remains calm. He is, after all, an expert at navigating market conditions like these. The key, he says, is not to listen to other people.
“In the 1930s, which is the most famous [economic downturn] in the past 100 years or so, a lot of people came out of that rich and built huge fortunes. But they were people who knew what they were doing and didn’t do other things, they just stayed with what they knew and became very successful,” Rogers says.
“What you really need to do when this bear market comes, is stay with what you know.”
- Source, CMC Markets, read more here
