A surefire, post-crash winner….

Tuesday 13th June 2017

A surefire, post-crash winner….

Jim Rogers is 74 and he says the worst crash in his lifetime is coming. This year or next….

Rogers is the Chairman of Rogers Holdings. He’s a legend in investment circles. His opinions are sought-after and carry weight.

Late last week he was interviewed by Henry Blodget on Business Insider’s Bottom Line segment and he didn’t pull any punches….

His message was clear and unequivocal: ‘We should be very worried.’

Rogers underscored that message with this chilling prediction. ‘You’re going to see governments fail. You’re going to see countries fail this time around….’

  • Current debt dwarfs 2008 levels….

Rogers doesn’t know exactly when the crash will come. Or where it will start. ‘These things always start where you’re not looking,’ he told Blodget.

But Rogers has no doubt the crash is coming. Or that crushing levels of government debt will feature heavily in what unfolds….

‘In 2008, we had a problem because of debt. That debt was nothing compared to what’s happening now. In 2008, the Chinese had a lot of money saved for a rainy day. It started raining, they started spending the money. Now, even the Chinese have debt. And the debt is so much higher. The Federal Reserve balance sheet is up over five times since 2008. Be worried….’

And Rogers believes bureaucrats and politicians will be unable to stop the bleeding this time. ‘They will try but it won’t work. It won’t work this time….’

It’s a sobering warning for investors with money in the markets. Rogers was talking about what he sees happening in the US. But when the bubble in American markets bursts, the shockwaves will be felt globally.

Individual investors, businesses, institutions, governments and entire countries will face financial wipe-out. Western civilization will teeter on the brink….

People will call for the government to ‘do something’. But Rogers believes politicians and bureaucrats have no cards left to play.

When the crash comes, nobody will be able to retard or mitigate its effects. Nothing will cushion the blow. This time, it’s really going to hurt….

  • How’s your mandarin?

Rogers isn’t just engaging in whimsical flights of fancy to fill airtime between commercial breaks.

He’s seen this catastrophe coming for years. And he hasn’t stuck around waiting for the bomb to detonate….

Back in 2007 – ahead of the 2008 crash and well in advance of what comes next – Rogers lit out of America and moved his family to Singapore.

‘My children speak mandarin because of what’s coming….’ Rogers told Blodget. Asia is where the future is at according to Rogers. In 2007, he said:

‘If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia….’

Time will tell how smart Rogers’s relocation proves to be. One thing is certain: you can’t accuse the man of failing to heed his own warnings.

  • Catastrophe delivers difficulties and opportunities….

Decamping to Singapore is not an option for me. In any case, my grasp of mandarin is limited….

Whatever comes down the river, I’ll be dealing with it here in Britain. And, like Rogers, I believe there will be some serious effects to deal with.

Like Rogers, I believe a big crash is headed our way. I’ve said it repeatedly in this column. Revisit my most recent thoughts here and here.

Like Rogers, I don’t know exactly when it’s coming. Or what will light the fuse. But markets have been on the up and riding high since 2009 – on the back of a limited number of individual stocks and despite a global environment of low growth and rising debt.

Investor sentiment has remained bullish throughout the entire period – giving the market relentless lift and elevation.

But sentiment is just sentiment – not genuine growth or banked corporate profit. It is mere faith and belief. Abstract rather than concrete. Sooner or later events will cause it to dissipate. When that happens, the whole shooting match will fall to earth.

Do I believe the world will end? No. Would I take pleasure in being right? No. At Money Truths, we merely set out to say it as we see it – and, in our own modest manner, to forewarn and forearm….

When the crash arrives, it will prove catastrophic for many. Investors will face staggering losses. Businesses will fail. Jobs will be lost. Times will be difficult. For many, it will be an event from which they never recover….

For others, the crash will represent a golden opportunity….

  • A bargain hunter’s paradise….

A fortnight ago I outlined a strategy that might pay dividends….

Hold cash in reserve, wait for the market to crash, buy an Exchange Traded Fund that tracks the market and then sit and hold long-term – taking advantage of the gains to be made as the market gradually recovers….

You buy and track the whole market rather than buy stock of individual businesses. You get the gains of the whole rather than depend on the performance of individual stocks….

It’s not a strategy to everybody’s taste. Some investors prefer to hang their hat on individual businesses. And there’s nothing wrong with that.

In the event of a crash the entire market will be affected. Stock prices will plummet. Some business will go broke. But not all.

Many businesses will weather the storm and retain good long-term prospects. And as investor-cash heads for the exit doors, stock in those businesses will be available for pennies on the pound.

A crash will create big problems for investors with skin in the game right now. But it will represent a bargain hunter’s paradise for those sitting patiently in the wings.

That’s the theory. In practice, success or failure will depend on buying stock in the right businesses. Easier said than done in a market where panic, negativity and fear are the dominant features.

I’m no Jim Rogers, but my advice would be to invest in companies in the business of producing toilet tissue….

  • A true totem of civilization….

I know. You’re wondering if I’ve been at the scotch bottle. But hear me out….

When making economies, nobody says to the wife: ‘Darling, we need to trim the budget. I think we can do without the loo roll this summer….’

The workplace, the pub, the restaurant, the hotel or the public building that decides to remove toilet tissue from its restrooms is making a huge error of judgment….

Everybody uses it. Nobody is going to stop needing it. Viable alternatives are few and far between. A world without it is unthinkable….

I don’t know about you. But in my house, we could do without a lot of sundry goods and consumer durables before we scratch three-ply Andrex from the shopping list….

Unglamorous, largely unloved and certainly taken for granted, toilet tissue is a mainstay of daily life – a true totem of civilization. We simply can’t do without it.

Come the crash, toilet tissue is one commodity that will remain in demand. A crash will barely touch sales figures. Companies that manufacture toilet tissue are safe bets for continued long-term prosperity – no matter how far their stock falls short-term. That stock has bounce-back-ability….

It might not be Netflix or Bitcoin or Snapchat. It isn’t cool or funky or fashionable. But for investors seeking a cheap post-crash bet, stock of companies in the toilet tissue business represents a winning proposition….

That’s how it looks from here….

Look out for me in your inbox on Friday morning. I’ve got something interesting to share….

All the best,

Dave Gibson

Money Truths