Famous investor Rogers said: 'The most severe financial crisis in history will occur in 2026, and this crisis is mainly due to two reasons: one is the insane debt growth of countries after the pandemic, and the other is the bubble of artificial intelligence.'
Jim Rogers, 82 years old, recently made a big statement, saying that in 2026, the most severe financial crisis in history will erupt, and the word he used was not 'possible,' but 'inevitable.'
If someone else had said this, people might have laughed it off, but the name Rogers carries too much weight in the investment circle.
What about this old gentleman? In 1970, he co-founded the Quantum Fund with Soros, achieving a return of over 4200% in ten years, shaking Wall Street to its core.
Retiring at the age of 37 after achieving success, while others retire to tend to flowers and walk birds, he spends his retirement riding motorcycles around the world, specifically looking for undervalued investment opportunities.
In 2005, Rogers came out and said that there was a big problem in the US real estate market. At that time, the elites on Wall Street thought this old man was talking nonsense. Three years later, the subprime mortgage crisis broke out, and the US economy was on the verge of collapse.
This kind of predictive ability, when placed in the investment circle, is considered god-like.
This time, Rogers is even more severe; not only does he speak up, but his actions also follow suit. He has already completely liquidated all his US stocks, leaving none behind.
An 82-year-old man has staked his decades of accumulated wealth on this judgment, which makes people seriously ponder.
The first bomb that Rogers worries about is the huge hole of global debt; US national debt has already exceeded $37 trillion. This number is too abstract, let's put it another way.
The US federal government adds $4.4 billion in debt every day, $1.8 billion every hour, and $3 million every minute. In the blink of an eye, the US government owes another sum of money.
What’s even worse is the interest expenditure; in 2024, the US will spend $1.1 trillion just on interest payments, a number that already exceeds the US defense budget.
In a country that is the world's number one, the money earned is not enough to pay the interest; anyone would feel anxious in this situation. Japan's situation is even scarier, with debt accounting for over 250% of GDP.
Back then, the Greek debt crisis caused global financial markets to be in chaos, and at that time, Greece's debt was only 180% of GDP. Japan's figure is significantly higher than Greece's back then.
Looking globally, the total public debt has reached $315 trillion. What does this mean? Adding up everyone's money in the world is still not enough to fill this hole.
How did this bad debt come about? Simply put, it is the aftermath of governments around the world printing money crazily during the pandemic years.
In 2020, the global economy came to a standstill, and the Federal Reserve, European Central Bank, and Bank of Japan all opened the floodgates, injecting a massive amount of liquidity into the market.
What was once life-saving money has now become a death knell. To curb inflation, the Federal Reserve has had to raise interest rates sharply. Once interest rates go up, the interest costs on these debts will also skyrocket.
The Federal Reserve is now in a dilemma; if they lower interest rates, inflation will rebound immediately, and the cost of living for ordinary people will soar. If they don’t lower interest rates, businesses and governments won’t be able to bear the interest burden, and a major crisis could occur at any time.
Ray Dalio of Bridgewater said it very vividly; the US is now like a ship sailing towards a reef. The captain knows there is danger ahead, but it is too late to change course.
During the 2008 financial crisis, central banks around the world still had ammunition; interest rates still had room to drop, and they could rely on interest rate cuts and quantitative easing to rescue the market.
This time the ammunition has run out, interest rates are already high, and the balance sheet has ballooned like a balloon. When the next crisis comes, who will come to the rescue? This is what Rogers is most worried about.
The second bomb that Rogers worries about is the bubble of artificial intelligence. Don't get me wrong; Rogers is not saying that AI technology is fake; the technology is indeed real and revolutionary, but stock prices are fictitious, and the bubble is real.
Currently, the "Big Seven" in the US stock market—Apple, Microsoft, Google, Amazon, Meta, Nvidia, and Tesla—account for 36% of the S&P 500 index weight.
What does this mean? More than half of the ups and downs in the US stock market depend on the fortunes of these seven companies. This level of concentration far exceeds that during the internet bubble period in 2000.
At the height of the internet bubble, tech stocks accounted for only 6% of the total market value; now it has multiplied several times.
Nvidia's market value has surged to $4 trillion. What does this number mean? The combined market value of the top 20 listed companies in Europe is still less than that of Nvidia alone.
The Shiller P/E ratio of the S&P 500 has risen to over 40 times, approaching the historical high of 44 times during the 1999 internet bubble.
What was the situation in 1999? The Nasdaq started to crash in March 2000, dropping 78% over two years, leaving countless people bankrupt.
What's more interesting is the actions of tech tycoons; they all claim that AI will change the world and that AI is the future, but they are frantically cashing out.
Zuckerberg is reducing his stake in Meta, Bezos is reducing his stake in Amazon, and SoftBank has sold over 30 million shares of Nvidia, cashing out $5.8 billion.
These people understand the market the best; their bodies are much more honest than their mouths. Michael Burry, the legendary figure from the 2008 subprime mortgage crisis who was made into a movie, has already started shorting Nvidia. Looking at these signals together, take your time to ponder.
Rogers says that the current AI concept stocks remind him of Cisco in 2000; back then, Cisco was the highest-valued company globally, and everyone believed that the internet was the future, buying Cisco meant buying the future.
The internet has indeed changed the world, but if you bought Cisco at its peak in 2000, you would be trapped for over a decade to break even. The technological revolution and stock price bubbles have always been two different things.
So what should ordinary people do? Rogers gives very old-fashioned advice—hold cash, buy some silver, and stay away from hot bubble assets. This sounds unexciting and lacks the allure of getting rich overnight, but at this critical moment, preserving capital is far more important than how much money you can make.
For ordinary people, instead of living in fear every day, it is better to sort out their financial situation, reduce debt, keep enough cash, and prepare for any possibilities.
