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George Soros and Jim Rogers warn on financial markets

Posted on 06 October 2010 with 4 comments from readers

Two old hedge fund partners who have long since gone their separate ways as billionaire investors, the legendary George Soros and Jim Rogers are buying commodities because they reckon stocks, bonds and real estate are not the place to be invested in current markets.

Jim Rogers commented this week: ‘Whether the world gets better or does not get better, commodities are going to do well. If the world economy does not get better, stocks are going to fall apart. We have a bubble forming in bonds. Bonds are selling at much higher price and that bubble is going to burst some day. So if I would do any defensive buying, I would start in the commodities market, not the stock market.’

Hot Commodities

The author of ‘Hot Commodities’ (click here) Jim Rogers first bet on the start of a secular bull market in commodities back in 1998. And as The Daily Reckoning points out today the index he developed at the time is up 15.5 per cent since early July.

Meantime, his old partner George Soros who is believed to be one of the models for the fictional Gordon Gekko and has approximately $25 billion under management , has recently slashed his US equity investments by 42 per cent to $5.1 billion. But actually it is the situation in Europe that troubles him most.

In remarks prepared for a speech to Columbia University today, Soros will say: ‘Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learned from the Great Depression of the 1930s, and will set in motion a deflationary spiral in debtor countries. It is liable to push Europe into a period of prolonged stagnation or worse.’

German depression

Recent press comment has focused on record GDP growth in Germany but total GDP is still running at seven per cent below pre-crsis levels. This has produced the illusion of a recovery that has not actually happened.

Soros warns: ‘Under duress, the euro has begun to remedy its main shortcoming, the lack of a common treasury. But it is far too early to celebrate because the emerging common fiscal policy is dictated by Germany and Germany is wedded to a false doctrine of macro-economic stability, which recognizes only the threat of inflation and ignores the possibility of deflation.’

The man who broke the Bank of England in 1993 has also become a gold bug doubling his gold holdings (click here) while his former business partner Jim Rogers reckons silver offers even more upside (click here). Looking at the price of gold and silver this morning these old guys are still ahead of the game.

Posted on 06 October 2010 Categories: Bond Markets, Global Economics, Gold & Silver, Hedge Funds, Private Equity, US Stocks

4 Comments posted by readers:

Comment by obewon - 06 October 2010

“these old guys are still ahead of the game.”

Yep, they sure are. It’s interesting to ponder over the diametrically opposite character of each.

Enter Jekyll and Hyde:
On the one hand, Rogers has consistently been straight about his investment advice, never trying to deliberately deceive the public, while not revealing his entire hand.

Then there’s Soros, who holds his hand close to his vest, reveals practically nothing of value to the public, and has a proven record of deception and deceit (e.g. “gold is the ultimate bubble . . .”. His tactics are much like those of the vampire squid GS, whose pronouncements on FX currency trades are so deceptive that traders now routinely take the other side of any GS recommendations.

Hats off to Jim Rogers . . . My friends and I have done well in our investments over the past 10 years, thanks in part to Rogers’ honesty.

Comment by Andy - 06 October 2010

George Soros has also been warning that this Gold rally is a bubble that will not last.

Comment by obewon - 07 October 2010

@ Andy:
Yeah, Soros is a very devious SOB. Last year, while he was furiously buying gold, he was selling the notion that gold is the ultimate bubble. Earlier this year, he was still buying gold, while saying the opposite.

Whenever he speaks, I’ll take the other side of his “publicly made” bet. Ditto GS.

Comment by anna - 22 October 2010

When he dies his fortune will go back to his owners.

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