Jim Rogers' U.S. Exit: A Structural Reassessment of Valuations and Debt

Jim Rogers has definitively closed the book on the U.S. stock market. In late 2025, he liquidated his final equity holdings, marking a full pivot away from the market's longest bull run since 2009. This move is not a minor portfolio tweak but a structural reassessment by one of the world's most seasoned investors. The catalyst was a market that had reached a point of extreme valuation, as evidenced by the S&P 500's 16.39% annual gain and its 38 new record highs throughout the year. For Rogers, these milestones signal a cycle coming to an end, not a reason to stay invested.

His primary concerns are twofold and deeply structural. First is the perceived speculative frenzy in artificial intelligence. Rogers views the meteoric rise of tech giants, particularly the so-called "Magnificent Seven," as a bubble built on "blue sky" hype rather than immediate, sustainable productivity. Second is the overwhelming weight of systemic debt, which he sees as the fuel for the current "Everything Bubble." In his view, the era of easy, liquidity-driven gains has expired, leaving the market stretched with insufficient fundamental support.

The decision to exit was deliberate. Rogers stated that the U.S. market had been rising since 2009 - the longest growth period in U.S. history. He sold everything because, in his assessment, this cycle is coming to an end. His new focus is on frontier markets like Uzbekistan, where he has purchased most of the stocks traded on the local exchange. This shift from the world's most mature equity market to a nascent one underscores the depth of his conviction that the U.S. equity environment is fundamentally altered.

Assessing the Valuation and Bubble Thesis

The core of Rogers' exit is the "AI bubble" narrative, but a closer look at the numbers reveals a more nuanced picture. While the S&P Technology sector trades at a rich 30.4x forward earnings, this multiple remains well below the 58.7x peak of the dot-com bubble. The market's resilience is also telling. Even as big tech took a breather, other sectors like banks and industrials hit new highs, and the Bloomberg Commodity Index gained 10% over the year. This breadth suggests the "everything bubble" thesis may be overstated for the broader economy.

More critically, the current phase appears distinct from a purely speculative financial bubble. Amazon founder Jeff Bezos described the AI era as an 'industrial bubble'. In his view, these periods are driven by real capital investment as new industries are built, with both good and bad ideas receiving funding. The resulting inventions accrue to the economy, unlike bubbles that are born purely on speculation. This dynamic is supported by concrete data: the three largest cloud platforms reported accelerating segment growth of 28.5% year-on-year, and AI-related capital spending plans have surged, with combined outlays for 2025 now expected to hit $488.5 billion.

The bottom line is that while valuation multiples have risen, they are being supported by tangible growth. Earnings for S&P 500 constituents grew an estimated 13.1% year-on-year in the third quarter, and the technology sector is expected to report earnings growth of 27.1%. This demand-driven investment cycle, where rising valuations are accompanied by expanding fundamentals, creates a different risk profile than a classic bubble. For Rogers, the fear is of a speculative blow-off. For now, the market shows signs of a maturing industrial boom.

The Strategic Pivot: Frontier Markets and Capital Allocation

Jim Rogers' reallocation into Uzbekistan is a classic contrarian strategy for capital preservation, executed with maximum conviction. By purchasing most of the stocks traded on the local exchange, he is not chasing a trend but seeking asymmetric opportunities in a market that is still in its infancy. This move represents a structural reallocation from the mature, overvalued U.S. equity market to an international frontier asset, a shift that underscores his belief that domestic exposure is no longer the optimal path for wealth preservation.

The logic is straightforward. In Uzbekistan, Rogers is buying a "clean slate" at a time when the U.S. market is stretched and debt-fueled. He is betting on the long-term economic opening and privatization plans of a Central Asian nation, a setup that offers the kind of uncorrelated growth potential he associates with the early days of China's economic miracle. His refusal to hedge currency risk in the Uzbek soum is a bold, high-conviction statement against the prevailing wisdom of currency hedging during global instability.

Yet this pivot is not a blind leap into the unknown. Rogers maintains a similar caution toward other emerging markets, particularly Chinese equities. He continues to hold stakes in Air China and China Eastern, but his comments reveal a watchful eye. He noted that the Chinese market has been rising almost without pause lately and explicitly stated he may have to sell these shares because "everything is getting more expensive". This duality is key: he sees value in the long-term recovery of Asian travel, but he is also acutely aware of the risks posed by rapid, sustained price appreciation. It is a calculated patience, not a permanent embrace.

The bottom line is that Rogers' entire portfolio shift-from the longest bull run in U.S. history to the nascent markets of Uzbekistan-marks a definitive break from the domestic equity paradigm. This is a strategic pivot driven by a structural reassessment of risk and opportunity. For now, his capital is deployed in a frontier where the potential for asymmetric returns is high, but so are the execution risks. It is a bold wager that the era of easy gains in the world's most mature market is over, and the next chapter of capital allocation belongs to the undiscovered.

Catalysts, Scenarios, and What to Watch

For investors, the critical question is not whether Rogers is right, but what events would prove or disprove his thesis. The primary catalyst for validating his call is a significant market correction in U.S. equities. Rogers has explicitly warned of a potential "big upward movement" before the cycle ends, but his exit suggests he sees the risk of a sharp reversal as the dominant scenario. A sustained pullback, especially one triggered by a loss of confidence in AI-driven valuations or a sudden spike in interest rates, would be the clearest signal that the bull market's final leg is over.

At the same time, the Federal Reserve's policy path is a key source of near-term volatility. The central bank is navigating a divided mandate, with some policymakers prioritizing a cooling labor market while others caution against reigniting inflation. This internal tension, coupled with the Fed's recent actions to support a softening economy, creates a policy environment prone to swings. Investors should watch for any shift in tone or pace from the Fed, as its response to economic data will directly influence market sentiment and the cost of capital.

A more subtle but telling divergence to monitor is between U.S. equity performance and broader economic indicators. The market's resilience, with the S&P 500 hitting 38 new record highs and the Bloomberg Commodity Index gaining 10% over the year, suggests a rally supported by liquidity and sector rotation. If this outperformance persists while real economic growth, corporate earnings, or consumer spending data show signs of softening, it would test the sustainability of the current rally. Such a disconnect could validate Rogers' concern that the market is being driven by speculative forces rather than fundamental strength.

The bottom line is that Rogers' thesis hinges on a structural reassessment of risk. For now, the setup is one of high valuation, significant debt, and a market that has risen for a decade. The catalysts to watch are those that could break the current equilibrium-whether a policy misstep, a loss of earnings momentum, or a sudden flight from perceived bubbles. In that environment, the most contrarian move may be to stay invested, but only with eyes wide open to the potential for a new, more volatile chapter.