Words of Wisdom From Jim Rogers

Earlier this week I received an email from a good friend with a link to a list of 14 brilliant insight from legendary investor Jim Rogers. Truthfully I didn't know much about him until recently when I read the Jim Rogers chapter in my friends' Josh Brown and Jeff Macke's book Clash of the Financial Pundits. It's a fantastic book filled with tons of stuff that we should all be aware of as traders and investors. Anyway I thought this was a great read and wanted to pass it along.

Here are a few of my favorite quotes:

Once you’ve invested in something, done your research, made money, and decide to sell, you need to be careful, Jim Rogers says:

Now that is a very dangerous time. It is dangerous because you think you are really hot. It is the time when you think you know that this investing thing is an easy game. It is the time that you should open the curtains, look out the window, go to the beach, do anything but think about investing. Because now is when you’re most vulnerable. You think: I have to find something else. I have to do it again. This is wonderful. This is so easy. Just as I thought after tripling my money with my puts. … It is the great mistake people make.”

***

Brokers will tell you to diversify, but Rogers writes that this is mostly to protect themselves.

“If you buy ten different stocks, chances are some will be good,” he writes. “You are not going to go broke, but you are not going to make a lot of money, either. … The way to get rich is to find what is good, focus on it, and concentrate your resources there. But make very sure you are right. Because it is also a fast way to go broke.”

***

"It is remarkable how many people mistake a bull market for brains."

“There is nothing quite like a bull market to make people think they are smart,” Rogers writes, adding: “All big bull markets, secular bull markets, end in a bubble. Everyone chases the conventional wisdom, following what they read in the press, and that presents the smart investor with opportunities.”

***

In the early 1970s, Rogers shorted six companies and was wiped out. He realized he didn’t have the “staying power” one needs to be a short seller. “Within the next two or three years, every one of those six companies I had shorted went bankrupt, and I was a genius. Which put me in the mind of saying, “If you’re so smart, then why aren’t you rich?”

“This was the perfect example of being smart and not being rich. I had been so smart I went broke. I did not know what the markets were capable of.”

“On Wall Street there’s no truer adage, I learned, than the one attributed erroneously to John Maynard Keynes: ‘Markets can remain irrational longer than you can remain solvent.'”

***

Investors should remember that change is inevitable, and they should learn to think for themselves. From Rogers:

You pick any year in history and go back and then look to see what everybody thought was true in that year, 15 years later the world had changed enormously. Enormously. And yet in that particular year everybody was convinced that this is the way the world was …

I have learned, for whatever reason, to know that change is coming, to know to think against the crowd, that the crowd is nearly always wrong and to try to think for myself. Now, I certainly make plenty of mistakes and have made plenty of mistakes in my life, but these are some of the things that I have learned, to try to think around the corner, try to think to the future if you want to be successful.”

Go read the rest of the piece here

Source:

14 Brilliant insights from legendary Investor Jim Rogers (Business.Financialpost.com)