Jim Rogers Says Don't Buy U.S. Stocks

The New York Sun reports:

Late last August, celebrity money manager Jim Rogers, a New York City resident for 20 years who was bearish on both the economy and the stock market, packed his bags and flew to Singapore to take up permanent residence there with his wife and 4-year-old daughter. "I see a lot of problems ahead for America," he told me at the time.

Over the weekend, I rang up the 65-year-old manager in Singapore and asked him a question posed via e-mail by reader Margo Halloway: "Since Jimmy Rogers has been so right, why not ask him what he thinks now?"

Mr. Rogers, who in the 1960s teamed up with global investment whiz George Soros and made millions before they parted company, is even more bearish now despite the drop of about 15% in the major averages from their highs. "The trend is still lower and I wouldn't buy any American stock now," he told me. "Unless you're a very good trader, you're not going to make money on the long side."

He added: "I don't know if the market is going down another 10% or 50%, but it's going down. Washington," meaning the Federal Reserve, the Treasury, and President Bush, "is making loads of mistakes."

Mr. Rogers, whose second daughter, Beeland, was born over the weekend, is especially critical of the Fed's policy of printing money like crazy in an attempt to prop things up. That's what Japan did in the 1990s, he noted, and the Japanese market is 60% below where it was in 1990. "In the end," he said, "the Fed's action will produce much higher inflation, a weaker dollar, higher long-term interest rates, and the worst recession we've had in years."

He said he believes Bear Stearns should have been left to go bankrupt, characterizing the Fed's bailout of the liquidity-squeezed brokerage as "welfare for the rich." In the last several weeks, he points out, the Fed has taken on its balance sheet $400 billion of suspect assets. "Chairman Ben Bernanke is giving away America to save the investment banks and that's not what the Fed is supposed to do," he said.

Although extremely bearish, Mr. Rogers thinks a near-term rally could occur, given the recent decline. As a result, he has covered some shorts and stopped selling the dollar, which he says is ultimately headed considerably lower. Still, he remains short Fannie Mae, which he says he thinks is going broke, the home builders, and the investment banks.