Jim Rogers Shorting US & Emerging Market Indexes ~ market folly

Friday, May 7, 2010

Jim Rogers Shorting US & Emerging Market Indexes

A few months ago we detailed how Jim Rogers had started some short positions. At the time, he was pretty vague but we did get a market call from him. This time around, he was more specific and more bearish. Legendary investor and ex-Quantum Fund founder Jim Rogers recently disseminated some of his thoughts via the Economic Times in India and keep in mind that he actually made these comments on Wednesday, so they preceded the downward market spiral we saw yesterday. Rogers noted that, "I am shorting a stock market index in the US; I am shorting an emerging market index and I am shorting one of the large western international financial institutions."

He specifically mentions that he's not shorting a particular country in the emerging markets but rather a cumulative index. Thus, traders/investors wanting to piggyback his trade could simply short the Emerging Markets exchange traded fund EEM. He is currently short that index because he feels there are excesses developing there. While he does not name names regarding his western bank short, Rogers says that, "it is a bank which people think is extremely sound & if I am right, there are going to be more currency problems and more turmoil in the markets. It will have to come down." So, let the guessing game begin there.

Further elaborating on currencies, Rogers says that, "The currency crisis has been going on for a while. It did not start this week. It has been happening for a while. It started with, maybe depending on how you want to look at it, with Iceland or Latvia or many other countries who have been having problems. And the currency crisis is continuing and is going to get worse. This is not the end. Over the next year or more, we are going to see more, so prepare yourself." An ominous omen from Mr. Rogers there, certainly. You'll remember that hedge fund 'rockstar' John Paulson has designed a fund to bet against the US dollar as he clearly feels the currency is in trouble. He is obviously not alone as Rogers is also worried about various currencies as is Eric Sprott who said to beware of fiat currencies at the recent Value Investing Congress.

So, we know what Rogers is bearish on, but what is he bullish on? Well, we previously outlined how Rogers is bullish on commodities and he has been for some time. We'll have to see how all of his market calls turn out, but even he admits that he's not a great market timer.

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