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Go Where The Chinese Government Is Going: Jim Rogers

Jim Rogers suggests playing a game of follow-the-leader with the Chinese government. According to him, the government’s spending is a pretty key indicator for the best investment opportunities.

Reuters Reporter Tara Joseph has a little one-on-one interview with Jim Rogers to get the skinny on what China’s government is doing with its funds.

Tara: “Jim, thanks very much for being with me now equity markets in particular seem to be in a bit of a comfort zone. Wall Street near record highs, Europe recovering. Japan had a fantastic 2013. Is this set to continue?”

Jim: “Well Tara, we have all the major central banks in the world flooding the world with money. Of course it’s going to continue. I don’t see anything that’s going to stop them right now. In America, even Congress has said we’ll spend as much money as you want to. So you have governments spending money. You have central banks printing money. I mean this is not good for the world, and it’s certainly not sound fundamental reasons for stock markets to go up but it’s a good party while it lasts.”

There is No Method in This Madness

Tara: “Okay while that party is lasting, what do you see as the biggest risk to the markets?”

Jim: “The biggest risk is madness. This is not good for the world. Debt is increasing everywhere. One of these central banks somewhere along the way is going to start cutting back, perhaps the American central bank will continue to cut back. Somewhere along the line, Tara, we’re all going to say, ‘oh my gosh this is serious.’ They’re serious about cutting back. Markets will go down. Markets will go down, I don’t know, 10… 20% and enough to scare everybody. Then the central banks will get scared. Then you know these guys are just academics and bureaucrats and then they’ll start printing money again. And the whole thing gets more and more elevated and more and more artificial. And when it pops, when this artificial sea of liquidity dries up, Tara, it’s not going to be fun. But I don’t see any reason that it would stop at any time soon. As I say, even if it stops, they’re going to get scared and print more.”

Let’s Get to Investing…

Tara: “Okay so with that environment, if you were putting your money somewhere in stocks, where would it be?”

Jim: “Well Japan, Russia, some parts of China. You know the Japanese stock market is down 70 percent from its all-time high. America’s at an all-time high. And normally you’re better off buying low and selling high. And Mr. Abe has no constraints on him, on his money printing or his spending, so probably the – and Mr. Abe recently as you may know they made a passed a law making it tax free for Japanese to invest in the stock market. Now I’ve been investing a long time Tara, and every time a country does that, people invest. I mean people aren’t foolish. And so you’ll probably see more and more money pouring into the Japanese stock market, both domestic and foreign.”

On the Fence With Japan… Go With China!

Tara: “Is there a particular sector you would choose within Japan?”

Jim: “Yes and no. I mean if you go back and look at the Japanese market you see most of the big blue chips have just been going sideways for years. If the public is coming back, and they will now because of these tax-free accounts, they’ll probably be buying a lot of the blue chips.”

Tara: “I’d like to turn to emerging markets. A lot of people telling me this is year to really differentiate in that big world of emerging markets. Is there a standout pick for you?”

Jim: “Every year is a year to differentiate. People who haven’t differentiated have suffered. In anything, whether it’s stocks, emerging markets, whatever it happens to be. Well the Chinese in November had their economic plenum and they said it’s one of the three most important in the history of China, the past 35 years in China, I’d take them at their word. So I would suggest people look some of the areas that the Chinese said we’re going to be spending a lot of money on these areas in the next 20 or 30 years. They’re going to clean up pollution. They’re going to spend a lot of money on railroads. They’re going to spend a lot of money on opening up healthcare. Go where the Chinese government is going. That’s where the money is. And not to say that there’s not money in the other areas too, I’m just saying with my money, I’m going to go along with the Chinese government.”