Veteran Investor Predicts Biggest Bear Market in His Lifetime
Veteran investor Jim Rogers predicts the next bear market will be the biggest one in his lifetime.
In a new interview with Real Vision Finance, Rogers says current economic conditions are similar to just before the Great Financial Crisis of 2008 – but the setup is far worse.
2023 has been somewhat of an awkward year in the stock market.
Economists have been anticipating a recession this year as well as a bearish market, but stocks have been rising this year.
A new report shows short sellers have lost $120 billion from this year’s rally as the S&P 500 has climbed to a 14-week high.
Short sellers have incurred roughly $120 billion in mark-to-market losses this year, including $72 billion in the first half of June, according to S3 Partners data.
Stocks such as Amazon, Apple, Tesla, alongside the S&P 500 have killed it this year; however, other retail favorites such as Mullen Automotive and Vinco Ventures can’t seem to find a bottom.
Rogers, a close associate of prolific investor George Soros and a co-founder of Soros Fund Management, says that the amount of debt that has accumulated within the system will inevitably lead to a severe bear market in risk assets.
“I know we’re going to have the largest bear market, the biggest bear market in my lifetime. In 2008 we had a big bear market because of too much debt…look out the window, since 2008 the debt everywhere has skyrocketed. Gigantic increases in debt.
So, I think it’s a simple statement that the next bear market will be the worst in my lifetime. Because the debt has gone up by such staggering amounts in the past 14 years.”
Is The Stock Market Ready for a Pullback?
Analysts over at S3 Partners say hedge funds are hopeful for a bear market.
“There are still many investors and hedge funds who think that this rally is ready for a pullback,” said Ihor Dusaniwsky, managing director of predictive analytics at S3.
“Or at least that several of the highflying stocks will lose steam and revert back to the mean.”
Hedge funds that are adding leverage after coming into the year positioned defensively have also increased their short positions; in other words, there’s strong indication of overleveraging.
“Hedge funds are increasing their market exposure, adding to both their long and short holdings, looking to play catch-up after missing some of the early year rally,” said Dusaniwsky.
Some of the highest short interest retail favorites include AMC Entertainment (NYSE:AMC) stock at 23.95%, Mullen Automotive (NASDAQ:MULN) at 20.25%, and GameStop (NYSE:GME) at 20.55%.
“Investors have been cautiously positioned really since last summer, in anticipation of this recession that has yet to materialize,” said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management.
“The more the market goes up, the more I think those who are on the sidelines have to figure out how to get back in.”
Read: AMC’s Cost to Borrow Is on The Rise Quick
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The corruption in the market will continue to be corrupt. AMC and GameStop and others will continue to be stifled.
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