Jim Rogers: US Stock Markets in a “Fool's Paradise”

The CNBC recently interviewed the legendary investor Jim Rogers who warned US stock market investors to “be careful”

The mania phase:

The U.S. is the largest debtor nation in the history of the world…We may well have a big, big rally in the U.S. stock market, but it's not based on reality. I would encourage investors to know you're in a fool's paradise, be careful, and when people start singing praises, say, 'I've been to this party before, and I know know it's time to leave.

The Fed Backlash

it is only a matter of time until the U.S. stock market runs into devastating problems due to the Fed's quantitative easing program and the prevalence of similar stimulative programs around the world.

Seasonal patterns + bigger imbalances

First of all, throughout American history, we've always had slowdowns every four to six years. That means that sometime in the next couple of years—three years, maximum—we are going to have problems again, caused by whatever reason,..For instance, there was 2001 and 2002, and then 2007 and 2009 was much worse. Well, the next time it's going to be worse still, because the level of debt is so, so, so much higher. Every country is increasing its debt at the same time.

Unsustainability of Fed Policies

This is the first time in recorded history that we have every major central bank in the world printing money, so the world is floating on an artificial sea of liquidity. Well, the artificial sea is going to disappear someday, and when it does, the catastrophe will be even worse. Yes, it's coming..If I was smart enough to tell you when it's going to happen, I would get rich.

Sitting and watching for now

I don't see any reason to rush out and sell stocks now, because of these artificial currents which are taking place. I'm not buying U.S. shares at the moment, but I'm not shorting either, because I am concerned this may turn into a huge bubble. So I'm sitting and watching.