June 3, 2009

FLASH: Jim Rogers - "S&P could go to 50,000, Dow Jones can go to 1,000,000"

What happens when you destroy the dollar and drop trillions and trillions and trillions from helicopters?

Things go up in price. Including stocks. And houses, and cars, and salaries, and oil, and gold, and bread, and, well, pretty much everything.

Remember, it's just a number. Something for monkey brains to get their heads around. They monkeys will feel rich during the first part of the hyperinflation, as asset prices soar.

And then they'll feel poor.

Invest wisely. (thanks I've Had It for the tip)

Jim Rogers: S&P Could Go To 50,000

Ahh, Jim Rogers, always good for a nice headline (see: above). In an interview with the Economic Times of India, the famously dramatic and bearish investor, hits on all his favorite themes, like the collapse of the West, the appeal of commodities and farmland, and of course inflation and the collapse of the dollar.

While he's negative on US assets -- he says he's gotten rid of all of his dollars, for the most part -- he advises against shorting this market.

"It's a bear market rally. I was going to say I don't think S&P 500 will see new highs. But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,000,000."

"Which is one reason why I am not shorting stocks right now. Because there is a possibility of this sort of a thing. There is a possibility that stocks could go through unheard of levels, but would be in worthless currency."

21 comments:

Anonymous said...

gotta love this:

http://www.cnbc.com/id/31082378


turbotax timmy is having real estate difficulties

Anonymous said...

Yeah he's talking about the illusion of stock market value in a bear market rally when the US dollar index is in decline.

You were on about a "for realz" recovery and housing bottom, Keith.

-Gonzo

Dr. Huxtable said...

Gross Backs Short-Term Inv, Warns Of Currency Diversifying

http://online.wsj.com/article/BT-CO-20090603-706055.html

The ability to make a fortune by investing others' money will grow more difficult over the next several decades, according to bond king Bill Gross.

The founder of giant bond-fund manager Pacific Investment Management Co. said in his monthly missive investors should expect lower rates of return than they grew accustomed to only a few years ago, with deleveraging, reregulation, rising taxes and limits on compensation making life tougher.

He recommended short-term investments where continuing low yield and price protection is more probable. Gross also called for a balanced budget once a sustained recovery is assured to head off negative effects of government spending on foreign-exchange and bond trading.

The government's plans for Treasury issuance of up to $3 trillion this calendar year and net offerings close to $2 trillion - almost four times last year's supply - are leading to a steeper U.S. Treasury yield curve and rising intermediate and long-term bond yields. Plus, the buyer of last resort is the Federal Reverse, expanding its balance sheet, which Gross said ultimately could lead investors to diversify away from the U.S. currency, selling Treasurys in the process.

The potential for the U.S. to lose its AAA credit rating illustrates the implications of the nation not producing as much wealth as global rivals, along with a parallel decline in the standard of living. Within 48 hours of Standard & Poor's Ratings Services cutting its ratings outlook on the U.K., the dollar fell 2% and U.S. stocks and long-term bonds declined by similar amounts, Gross noted.

However, the potential downgrade of the U.K. remained far off in Pimco's view, and initially seemed dubious.

The current environment sheds doubt that a recovery is on the way and the U.S. soon will return to fiscal conservatism. Gross contends that five more years of 10% debt-to-gross-domestic-product gaps could raise the U.S. debt-to-GDP ratio to more that 100%.

Nimesh said...

Keith, my boy, you won't let it go will you? You will continue to rationalize that simply because the government prints money it can create inflation and stop deflation? Well it was tried in Japan and didn't work. It won't work here either.

Asset prices are way too high and they have nowhere to go but down. Crashing down.

The credit bubble is still deflating and do you really think the banks will hand out money like candy?

For an excellent thesis on why just printing money can not divert deflation, read Robert Prechter's book, Conquer The Crash.

Supernintendo Chalmers said...

so Jim Rogers thinks the only central bank inflating and printing is our very own Fed? China just released $500+ billion of their own "stimulus." their global savings glut was central bank inflation run amok. c'mon, Jim, stick with farming and commodities.

keith said...

Jim Rogers did say short the pound, right as the pound hit its 1.37 dollar/pound low.

He was also spectacularly wrong on commodities, and Chinese stocks in 2008.

So take it with a grain of salt.

Remember the good old days when investing felt like investing, not gambling at the craps table?

Angry Leprechaun said...

So you are saying this is a doomsayer rally. Nice side step Keith. The doomsayer is still winning the argument. We are still fucked.

Anonymous said...

Bernanke sees recession ending soon; warns on debt

http://tinyurl.com/q46s75

Dr. Huxtable said...

http://www.cnbc.com/id/31084745

"What the Chinese are doing is moving some of their long-term assets into short-term so they can make a quick exit strategy," Peter Navarro, an economic at the University of California-Irvine, told CNBC this week. "Plus, they're setting up all these bilateral currency deals with countries around the world so they can back the dollar out. We are literally living on borrowed time."

Anonymous said...

Yawwn....Until banks start handing out easy loans and peoples homes stop deppreciating at record pace there will be no recovery. Just a big L shape crash. In stocks, housing and the whole financial system.

Anonymous said...

Bernanke can't cause inflation or stop deflation in any strict sense, but he can certainly mess up the value of the dollar if he puts his mind to it. So can Geithner. Zero percent Fed VISA cards for everyone? Or the government puts a floor under real estate by matching the buyer's money dollar for dollar in return for 50% of the home equity? There are any number of schemes that will kick the can down the road just a little bit longer and wipe out the dollar along the way.

Don't compare the US to Japan's attempts to reinflate. Bernanke and Geithner are far more corrupt, incompetent, and desperate.

But don't worry - Geither said we have a "strong dollar policy", although it was hard to hear over the Chinese laughter.

casey said...

I cannot see how real estate will go up if we have interest rates at 20%. Am I missing something here.Is this more fuzzy math?

Seems like real estate will tank.

wallstreetvet said...

You will have inflation on the things you need to buy (commodities) and deflation on the things you own (house) due to leverage. Read Peter Thiel's comments at the Ira Sohn Hedge Conference in NYC last week.

Thats why Peter was down single digits last year and up massive over the last 10yrs.

People stop thinking that inflation is a one way street, not everything goes up together.

Anonymous said...

Hehehehe.


You crack me up Keith. This is when I know that we are in a DEEP deflationary spiral and that the market is about to crash and shut Jim Rogers big mouth. What an idiot... You would have thought that he would know better after so many years of wrong calls.

When are Jim Rogers and Peter Schiff just shut up and hide somewhere until they figure out what is going on.

Dny

swannster river said...

What's with DAG today?

Anonymous said...

With the Great Helmsman Obama running the show anything is possible.

$100 Billion Bailout For IMF Tagged On To War Funding Bill .

Obama loves to spend don't he?! Truly one of the MTV generation. I bet Obama loves to watch Cribs while he thinks of all the things he can spend OUR money on.

Yeah, that the Pres-o-dent of the U-S-A!!

The what? Is it he the FOURTEEN TRILLION DOLLAR MAN now???

vanilla ice said...

Why would stock markets increase in value if assets are being eroded in value? A company with assets becomes less valuable during inflation, one would think.

Look at the 60's and 70's; inflation with flat stock markets.

Out at the peak said...

This would assume that outsiders with money (foreigner currency traders against USD, metal bugs, etc) would buy up all the stock at insane prices? Or that the Fed would pump money directly to institutions to just buy stocks.

Are earning going to triple? What's the P/E ratio going to look like. And outsiders think those are deals?

I do believe the USD will fall, but not cause the stock market to sky rocket. The illusion of stock worth is not a 1:1 conversion from foreign currency.

Is Jim buying up cheap way out of the money calls?

Accurate said...

Keith - what are you talking about. Did you get a swift kick in the head by some donkey? Come on, this is your boy, your main man, you messiah. He who has all the answers that are no answers. He who can answer without giving an answer.

Keith, no way man. The big Oh-Oh has all the answers, you keep telling all of us. Don't talk badly, drink some more kool-aid, you'll be fine and you will again see that he is the man with the plan.

Banana Republicrat said...

"He was also spectacularly wrong on commodities, and Chinese stocks in 2008."

That's why I handed the cyber-croupier a couple of short plays and feel good about them--if things do happen to go hyper the bunker is still packed with gold dubloons, energy plays, and foreign stocks from the last time I listened to this guy!

Anonymous said...

Jim Rogers has lost his marbles....

HE FORGOT TO FACTOR IN MASSIVE INTEREST RATE HIKES!!!