Jim Rogers: Stocks Will Fall Hard

Thursday, May 21, 2009 4:21 PM

By: Dan Weil
Don’t let the stock market’s 30 percent-plus rally over the last six weeks fool you, says superstar investor Jim Rogers.

Equity prices are overvalued, he says.

“I’m not buying shares,” Rogers told CNBC. “The bottom will probably come later this year, next year, who knows when.”

And why should stocks drop? Because governments have "flooded the world with money," he says.

In the United States and other countries, the problem is too much consumption and too much debt, Rogers explains. But governments and central banks are trying to solve that problem with more the same.

This “defies belief" and won’t work, he says.

"I mean … you give me five or six trillion dollars, I'll show you a very good time, there's no question about that."

And what should you buy if not stocks? Commodities, Rogers says.

"Fundamentals for General Motors are not getting better. Fundamentals for Citibank are not getting better,” he points out.

“I can think of very few industries in the world where the fundamentals are getting better. But the fundamentals of commodities are getting better, full stop."

Rogers’ favorite commodities include the agriculture sector and silver.

Rogers isn’t alone in his views on stocks and commodities. As for stocks, hedge fund manager Doug Kass tells CNBC a “vicious correction is in store.”

On the commodities front, Bill O’Neill, former head of commodity research at Merrill Lynch, tells Moneynews.com, “With all the uncertainty around the globe, commodities as an alternative asset will be attractive.”