Indian markets are getting too confident, excited & aggressive: Jim Rogers

War has never been good for the stock markets. The exception is the oil and gold markets where the prices go up, said Jim Rogers, chairman of Rogers Holdings in this exclusive interview.

Indian stock markets have been on an uptrend with the Sensex crossing the 75,000 mark for the first time ever recently. JIM ROGERS, chairman of Rogers Holdings, tells Puneet Wadhwa in a video interview that there is too much exuberance developing in the Indian stock markets. Edited excerpts:

Almost every asset class – equities, interest rates, bond yields, cryptocurrency, real estate, gold, and crude oil – is on an uptrend. Irrational exuberance, and is it time to be fearful?

In the past when things like this have happened, it usually has led to problems. That said, I am not selling shorts yet. But I have seen such problems develop in the past. Stock prices have surged in most markets recently, except China, where stock prices are still depressed. Nearly everywhere in the world, things are getting exciting. There are new people coming into the markets and are getting very excited. Historically, that has led to problems.

Do you think this time could be different?

These are very dangerous words – ‘this time is different.’ If you hear someone say these words, be very worried. It’s never different. Human beings will always act the same when it comes to money and investing.

How do you see the geopolitical situation play out in West Asia? Implications for Brent crude oil and gold?

There are serious problems developing in the Middle East / West Asia. If it turns out into an all-out war, then that will be the end of the markets, crude oil and gold. Oil prices then will skyrocket and so will gold. Markets will collapse. War has never been good for the stock markets. The exception is the oil and gold markets where the prices go up.

What is the rise we can see in gold and crude oil prices if the geopolitical situation worsens?

I own oil and gold, not because of war, but because I see shortages developing of crude oil across the world. Gold prices, on the other hand, have been depressed since quite some time now. It has, however, started moving up again. Geopolitical worries will lead to higher gold prices. So, I am not selling gold. If I had to buy anything today, I would buy silver. Silver prices have dropped a lot from its all-time high. That said, I hold silver as well.

Has the latest inflation print in the US dented your hopes of an early rate cut by the US Fed? How big a part will the US election outcome play in shaping up the Fed’s policy?

Most central bankers don’t know what they’re doing. They are bureaucrats and academics who have a government job. That said, there was a good central banker in India a few years ago. But if you look at history, most central bankers did not know what they were doing. You have much credence to the US central bank right now, but they too don’t know what they’re doing. Inflation will come back, and then they will have to raise rates again. As a result, we all will suffer. Maybe, that will be the final straw for the stock markets.

How do you see the Indian stock markets shape up over the next 6 – 12 months?

Indian stock markets have been a great success story. Someone is doing something right there in India. I don’t own Indian shares. I had owned Indian shares in the past, but not now. I think someone in New Delhi finally knows what to do, and they’re doing all the right things. Not often in the past has New Delhi understood this, but now they seem to. I don’t own Indian shares, but if I did, I would not sell them right now.

What would make you buy Indian shares now?

That will be possible only if the stock prices went down. I don’t like to own expensive stocks and enter a market when it is at an all-time high. I missed the opportunity of investing in the Indian stock market, and it is not the first time this has happened.

What’s your one worry as regards the Indian markets?

The main worry is lots of new investors coming into the markets in order to make a quick buck / easy money. Those things are happening again and have happened in the past as well. All that has led to problems. We are not there yet, but will get there eventually. That’s the problem I see. There is too much exuberance developing in the Indian stock markets. Markets are getting too confident, too excited and too aggressive. All this will eventually lead to problems.

What factors can puncture the sentiment as regards Indian markets?

That can happen if New Delhi does something foolish. Politicians all over the world, including New Delhi, at times make mistakes. They change the regulations / laws thinking they’re doing good things, but they’re not. I don’t see that happening now in Delhi, but it could.

India goes to polls soon. What measures, in terms of policy reforms, would you like to see from the new government?

The current Indian government is saying and doing all the right things. The laws are changing and some industries / sectors are turning attractive. Someone in New Delhi now understands how to run an economy. I certainly approve of the things that the Indian government is doing.

Any specific reform measures?

I would make investing easy, make the currency convertible and open up the (stock/financial) markets more. I would make it possible for anyone to go online and buy Indian stocks and currency. No red tape.  India is getting better, but not there yet. This is 2024 and not 1924! Why isn’t India completely open for investors? It is time for India to go all the way.

Are there any sectors that you would like to invest in India if valuations corrected a bit?

Indian tourism, perhaps. India can and will be one of the greatest tourist countries in the world someday. If I could find a cheap Indian tourist company, I would invest. If one could visit only one country in your life, it has to be India. There is no country like it in the world. It has great tourism potential. If I find a good tourism company here, I would definitely invest.

Which other equity markets across the globe appear attractive to you? Where all have you been investing?

I have started investing in Uzbekistan where the stocks have now started to do well. Chinese stocks remain depressed. Baring these two, most global markets have been on a high, and this does not happen frequently. When it has happened in the past, it usually goes on longer than people expect, and it always leads to problems. But I don’t see problems cropping up yet.

What’s your view on Chinese and Japanese equity markets? Can they steal the thunder from India in the next 12 – 18 months?

I owned Japanese shares, but sold them a couple of weeks ago. Japanese markets were down for almost 35 years. Now that they have started to do well, they may continue to do so for a while. The authorities are making their markets attractive for people to invest. So I suspect that they are likely to go higher. That said, it does not mean that Japan does not have serious problems, but the stock market is different from the country.