Jim Rogers warns technology is heading for a big drop

Billionaire investor Jim Rogers issued another warning to the investors and made the aware that there is a sector they should avoid in order to save their investments. The co-founder of the Quantum Funds with George Soros might made some wrong moves in his career but he has gained fame for some of his warnings. In a 2007 interview with Reuters, Rogers predicted a 40-50% drop inreal estate prices in some areas of the United States and a massive recession across the country. The United States still can not find a way out of this downfall.

Investors all over the world take note when the legendary Jim Rogers makes any market prediction. And the billionaire is now warning that one sector of the market is "priced in lunacy," so he is betting heavily against the group. The sector has seen earnings fall by 4.3% in the third quarter compared with the same period last year, almost double the decline of 2.2% for the overall market. Rogers is talking about technology.

And indeed, there are several reasons the technology sector is due for a correction. The sector outperformed all others during the past four years with an annualized gain of 19%, while the S&P 500Index gained 12% in the same period. This outperform may already be working itself out with a drop of 10% so far this quarter compared with a decline of 6% in the rest of the market.

Of more concern, four years after the financial collapse, U.S. companies have yet to really ramp up hiring. While Europe and China are looking incrementally better, the United States is facing a huge fiscal gap in the coming quarters, with even the most optimistic forecasts only calling for about 1.5% gross domestic product growth. With labor already cut to the bone, companies are putting off improvements in tech spending ahead of the fiscal and economic uncertainty.

One big clue to the level of frothiness in the tech sector could be coming from the rebound in real estate prices in Silicon Valley . Real estate has soared in the tech capital and prices are off their peak by just 1.3% in some cities, while much of the rest of the state continues to struggle with foreclosures.

There may yet be hope for the sector. Tech companies in the United States earn more revenue outside U.S. borders than any other sector, making the tech industry more resistant to fiscal cliff worries and weakness here at home. Revenue should be marginally supported if Europe can stage a rebound or if emerging markets continue their economic march higher.

President Barack Obama will need to barter with Congress if he wants to let the Bush-era tax cuts expire for those making more than $250,000 a year. One possible deal could revolve around another tax repatriation holiday like we saw in 2004. Under a repatriation holiday, U.S. companies are lured to bring foreign profits back to the country by taxing them at a roughly 5%tax rate , rather than the current 35% corporate rate. Because the tech sector has the most overseas revenue, it also has the most cash held overseas, so it could win big with such atax holiday .

In addition, Microsoft launched Windows 8 in October and will stop supporting Windows XP in early-2014. This could reinvigorate the corporate spending cycle for information technology (IT) and services. Further, if demand in fact rebounds, then tech spending usually leads the business cycle because it is easier to buy IT and services than to add staff.

Even Rogers admits there will always be success stories, but the problem is when an entire sector is pushed up without any real difference between the good and the bad. This was evident in some of this year's catastrophic IPOs -- Facebook (Nasdaq: FB) and Groupon (Nasdaq: GRPN).

Investors seem to have forgotten the lessons of the 2000 tech bubble, and are now paying meteoric prices for very little in earnings. While Groupon and Facebook have seen their shares sink since their IPOs, shares of LinkedIn ( LNKD ) are up almost 10% since its offering in May 2011.

There are those risks to be considered: Half of investing is keeping your profits before the bottom drops out of the market. Companies with strong balance sheets and good value should do well during the next year, but may see a short-term drop as investors take the entire sector lower. Investors should be ready for a short decline on sentiment before stronger stocks head higher.

There are some actions one can take. After years of outperformance, the tech sector could be due for a correction, as Rogers expects. You may not want to neglect the entire sector, but be selective and know when to take your money off the table. Given the valuations in much of the sector, investors may want to avoid some of the more expensive stocks and the general sector funds. For those who do not want to completely avoid the sector, look for large-cap companies with strong balance sheets that pay healthy dividends such as Intel.

Jim Rogers Remains Bullish on Precious Metals

According to legendary investor and co-founder of the Quantum fund with George Soros - Jim Rogers, the precious metals crowd has nothing to worry about now that Obama has been reelected. The billionaire urged the market to expect more of what we've seen in the past four years. The loose monetary policy, further quantitative easing and weak dollar will support the upward trend in gold and silver, according to Rogers.

Previous four years were very generous for precious metals. President Barack Obama's first term saw silver up an eye-popping 236% while gold added an impressive 128% gain. Those both precious metals overwhelmed the S&P 500's 75% return. Such huge results raised concerns in more than a few investors about another asset bubble in a long list of bubbles that includes technology, finance and housing in the past 12 years.

"Investors should prepare for rising prices and more expansionary monetary policy now that President Barack Obama has won reelection. "If Obama wins, it's going to be more inflation , more money printing, more debt, more spending," Rogers recently told CNBC. The investor also said he plans to sell federal debt and purchase more gold and silver.

So if Jim Rogers is correct, then investors should expect big things and rising trends from precious metals in the next four years. But with all kinds of precious metals investments to choose from, the landscape can be confusing. There are some risks to be considered before deciding to invest in gold and silver.

The biggest risk to gold is a liquidity crunch like the one we saw in the financial crisis of 2008. The trigger for an event like that could be Europe, which continues to struggle with too much debt and shortages of tax revenue.

Although the region continues to combat its financial problems, margins calls for big investment banks and intuitive traders would weigh on gold and silver. Jim Rogers is bullish on gold and silver, projecting that the next four years will look much like the last four years for precious metals.

Jim Rogers: Beware of Wild Money Printing

The election results in the United States of America set analysts on fire as they started to spread all kinds of predictions on how they think the next four years will go. Barack Obama securing a second term made some optimistic, while others are quite fearful. Among the second group is Jim Rogers, as his recent comments show little confidence in the USA economy and in the future. The world famous investor Jim Rogers was quoted as saying that he feels money printing is going to run amok now. He added that he had to invest based on what’s happening and not what he would like. An Obama victory has many worried that rampant money printing will continue, as the open-ended QE3 from the Fed has been met with much opposition. Still, monetary policy is at the will of the Fed, not Obama. Bernanke’s term does not end for another two years, so a Romney victory would likely have had little sway over the current policy.

JIM ROGERS for Businessinsider: I See A Dangerous Sign In The Gold Market, And Prices Are Going Down

Commodities guru Jim Rogers explains why he is bullish on agricultural commodities. He also tells us why gold and silver prices are headed down in the near-term: