GuruFocus.com
·5 min read
- By Bram de Haas
Jim Rogers, the co-founder of the Quantum fund together with George Soros (Trades, Portfolio) and the chairman of Rogers Holdings, did an interview with Kitco News on Aug. 19.
In the interview, Rogers shared some of the areas that he is investing in currently, but more importantly, he shared five pieces of advice on how to become a great investor.
Stay with what you know
One thing Rogers emphasizes during the interview is that people should stay with what they know:
"Everybody watching this knows a lot about something whether it's fashion or cars or sports or something when you see something that you know is going to be successful and exciting don't just say; oh that's going to be great. You do your research and you figure out how to and if you should invest."
The advantage you'll have in your area of expertise is that you will know about something long before other people in the investment community realize something has changed. You'll also know when to sell much better than other people.
Don't listen to hot tips
Nobody likes to hear it, everybody wants a hot tip. Everybody wants to be rich this month. Well the second advice is don't listen to hot tips.
Rogers found out early in his career that if you read the annual report, you did more than 90% of the people on Wall Street. If you read the notes to the annual report you're doing more than 98% of people investing. Do you homework. This is not easy.
Discover what works for you
Rogers isn't at all preaching his long-term contrarian investing style. Instead, he acknowledges there are lots of different styles. He says he gravitated towards his current style by failing using other methods:
"I know I'm a terrible short-term trader. I don't even try it anymore. I didn't know it then but i found out...
Whether the style picks you or you picked the style. For me it was trial and error."
In his youth, Rogers knew a very successful short term trader and watched as he wheeled and dealed. However, ultimately it didn't work for Rogers. Later he found his longer term contrarian niche and in the Quantum fund, he and Soros made a cumulative 4200% return in ten years.
Ignore others
Finally, Rogers emphasizes you have to find your path in the world. It isn't about what others think about it. Roger thinks this is the best thing to do even outside of investing:
"if you can find your passion, whatever it is that's what you should do. Ignore your friends. If you want to be a gardener you do it...
You'll wake up every day and have fun you will be the happiest person around. It won't matter if you're successful because you're happy. But you will be successful because those people are the most successful."
Don't be intimated
When Rogers started out, he figured everybody was smarter than him because they were older and had been around. They had more experience and everything. Gradually, he learned they made many mistakes too. He figured he should stop listening to them and he learned that he could figure out everything he needed to know himself:
"That's when I started realizing any key for me was to find something cheap that was changing and i realized about the numbers and the balance sheets."
Rogers learned that if he understood the numbers and understood what was going on he was going to be ahead of other people. It wasn't easy but it turned out he loved it:
"I loved to track down everything. It was purely by experience I learned that the more i knew about the companies, the competition, the numbers, the more likely i was to be successful."
What Rogers is investing in currently
Rogers is a true value investor. He likes to look at things that are ignored. These things are probably very cheap. It doesn't mean he will buy it, because there also has to be a catalyst for the price drop. He must find where there's a change taking place:
"For many decades i was anti-Russia and Soviet Union. I've never invested in Russia except when I was short of the ruble once. In recent years I have come to realize my god this place is hated, very cheap and there's not a lot of debt. I thought I perceived a change taking place in the Kremlin. That's the second word you need to understand. Cheap and a positive change. So if you can find something that's cheap and a positive change is occurring you're probably going to get very rich."
Rogers has owned gold for decades. He is still bullish on gold. He expects gold to go much higher. It may even turn into a bubble. He hopes it doesn't, because then he'll have to sell it. The main reasons he perceives gold as a great investment are because of interest rates being where they are on a global scale, the global debt situation and consequently all the money printing going on.
Disclosure: Disclosure: the author has bought long-dated calls and sold calls on the SPDR Gold Trust (GLD) resulting in a net long position.
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This article first appeared on GuruFocus.
I'm an investment enthusiast with a deep understanding of financial markets and investment strategies. Over the years, I've closely followed the insights and experiences shared by renowned investors like Jim Rogers, the co-founder of the Quantum fund alongside George Soros. In this interview with Kitco News, Rogers imparts valuable advice on becoming a successful investor. Let's break down the key concepts discussed in the article:
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Stay with what you know: Rogers emphasizes the importance of investing in areas where you have expertise. This aligns with the concept of investing in businesses or industries that you understand well. By doing thorough research and leveraging your knowledge, you gain an advantage over others in recognizing potential opportunities and knowing when to exit investments.
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Don't listen to hot tips: Rogers advises against relying on hot tips for investment decisions. He highlights the significance of reading annual reports and notes, stressing that thorough research is key. This aligns with the fundamental principle of conducting due diligence and understanding the underlying fundamentals of an investment before making decisions.
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Discover what works for you: Rogers acknowledges that there are various investment styles and encourages individuals to find what works best for them. This echoes the importance of self-awareness in investing—understanding your strengths, weaknesses, and preferred investment approach. It's a personalized journey that often involves trial and error before settling on a strategy that fits.
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Ignore others: Rogers emphasizes the need to find your own path and pursue your passion, irrespective of others' opinions. This extends beyond investing and resonates with the idea that individual conviction and passion drive success. In the context of investing, it's crucial to stick to your strategy and not be swayed by external noise or market sentiment.
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Don't be intimidated: Rogers shares his early realization that experience and age don't necessarily equate to intelligence in the investing world. This underscores the importance of self-confidence and the ability to critically assess information. Being well-versed in financial statements and understanding the metrics involved gives investors a competitive edge.
Additionally, Rogers reveals his current investment preferences. As a value investor, he focuses on overlooked opportunities and identifies positive changes in cheap assets. He mentions a shift in his perception of Russia, considering it cheap with a positive change in the Kremlin. Furthermore, Rogers expresses a long-standing bullish stance on gold, citing factors like global interest rates, the debt situation, and extensive money printing.
In summary, Jim Rogers' advice aligns with fundamental principles of investing, emphasizing knowledge, research, individuality, and a disciplined approach to finding value in the markets.
