Menu IconA vertical stack of three evenly spaced horizontal lines. Legendary investor Jim Rogers sat down with Business Insider CEO Henry Blodget on this week’s episode of “The Bottom Line. What To Invest In During A Crash: One of the things I’ve always admired about you as an investor is that you don’t talk about what should be. You figure out what is going to be and then you do that. So what is going to be with respect to the stock market?
Rogers: I learned very early in my investing careers: I better not invest in what I want. I better invest in what’s happening in the world. Otherwise I’ll be broke — dead broke. Well, what’s going to happen is it’s going to continue. Some stocks in America are turning into a bubble. Then it’s going to collapse, and you should be very worried. But, Henry, this is good for you. Blodget: Well, yeah, TV ratings do seem to go up during crashes, but then they completely disappear when everyone is obliterated, so no one is hoping for that. So when is this going to happen?
Rogers: Later this year or next. Blodget: Later this year or next? Blodget: And what will trigger it? Rogers: Well, it’s interesting because these things always start where we’re not looking. And then Bear Stearns went broke. Always happens where we’re not looking. It could be an American pension plan that goes broke, and many of them are broke, as you know. It could be some country we’re not watching. It could be all sorts of things.
It could be war — unlikely to be war, but it’s going to be something. When you’re watching Business Insider and you see, “That’s so interesting. I didn’t know that company could go broke. Send me an email, and then I’ll start watching. Blodget: And how big a crash could we be looking at? Rogers: It’s going to be the worst in your lifetime.
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Blodget: I’ve had some pretty big ones in my lifetime. Rogers: It’s going to be the biggest in my lifetime, and I’m older than you. No, it’s going to be serious stuff. We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one. This is the longest or second-longest in recorded history, so it’s coming. And the next time it comes — you know, in 2008, we had a problem because of debt.
Henry, the debt now, that debt is nothing compared to what’s happening now. In 2008, the Chinese had a lot of money saved for a rainy day. Now even the Chinese have debt, and the debt is much higher. The federal reserves, the central bank in America, the balance sheet is up over five times since 2008. It’s going to be the worst in your lifetime — my lifetime too. What’s going to happen is, they’re going to raise interest rates some more.
Then when things start going really bad, people are going to call and say, “You must save me. And the Fed, who is made up of bureaucrats and politicians, will say, “Well, we better do something. And they’ll try, but it won’t work. It’ll cause some rallies, but it won’t work this time.
Blodget: And we are in a situation where Western civilization already seems to be possibly collapsing, even with the market going up all the time. Often when you do have a financial calamity, you get huge turmoil in the political system. What happens politically if that happens? Rogers: Well, that’s why I moved to Asia. My children speak Mandarin because of what’s coming. You’re going to see governments fail. You’re going to see countries fail, this time around.