GLOBAL - The only place where there is currently a pure bull market is in commodities, investment guru Jim Rogers told the SuperHedge conference today.
Allaying investor fears that commodities are dangerous, the author of bestselling books ‘Hot Commodities’ and ‘Adventure Capitalist’ pointed out that economic history shows there have been periods of long bull markets in commodities. “They happen because and supply and demand get out of whack,” he said.
During the 1980s and 1990s no one was advising investors to invest into sugar plantations and lead mines, as commodities were in a bear market, however mines and oil reserves have are now becoming depleted.
“All the great oil discoveries that we know of are over 35 years old,” he said. Production is in decline in Alaska and Mexico while the UK will become a net oil importer over the next 10 years. “Investors needed to understand what is going on,” he declared.
“Supply has been going down while demand has been going up.” Rogers pointed that in 1998 he set up his own index commodities fund.
“This is a simple basket of shares in an index. The fund has grown 185% from inception to end-January.”
He predicted there would be setbacks on the way, for example if China has a hard landing this year that may cause a setback in the market. If this happens his advice was to buy commodities and China. “That’s going to be your last opportunity to buy them.”
“The bull market in bonds is over. Bonds peaked in 2003 and could now be going down for the next 20 years or so. They are now in a long bear market having been in a long bull market. Even if bonds do not go down investors would not be making any money from them at four percent yields, he said.
“Stocks all over the world are over-priced.” For the next one to two decades stocks are going to act as in the 1970s and fluctuate. “If you are good at catching these swings you will make money.”
“Real estate in much of the world is in a bubble,” he concluded.