July 15, 2005

Investing rules from Jim Rogers

Read a very good article on Jim Rogers in capitalideasonline.com . He was a partner with gorge soros , i think, and has published quite a few good books like investment biker etc .
The link is given below

some excerpts

Rule 1: Do your own work. Don't be afraid of being a loner.

"I learned early in my career that if you read the annual reports, you've done more than 90% of the people on Wall Street. If you read the notes to the annual report, you've done more than 95% of the people on Wall Street, and if you actually sit down and do a spread sheet, you've done more than 98% of the people on Wall Street." (emphasis mine)

Rule 2: Good investors need a historical perspective­.

Rule 3: Think conceptually about the world.

Rule 4: Don't buy stocks at high multiples.

"I don't buy them because, by the time they reach a high multiple, it's probably about time for it to come to an end. Wall Street and politicians are the last to catch on to any­thing," said Jimmy. He doesn't sell a stock just because it happens to have a high multiple. He either waits for a fundamental change or for an indication that something is about to go wrong.

Rule 5: Be selective in your investing and look for one good idea.

"The most important trick for getting rich on Wall Street is not to lose money. There are many guys," he said, "who do well for two years and then get creamed. Wait until you have a winner and are sure. In the meantime, keep your money in treasury bills. Professional money managers feel that they have to do something all the time and are the worst at following this advice.

"Even if you only have one play every ten years, you're going to do a lot better than most people."

Rule 6: Every investment should be considered a commodity that will be affected by supply and demand changes. It's just a question of when.

Everything has its own supply and demand cycle, which may be a twenty-, thirty-, or fifty-year cycle, and every­thing is basically a commodity in the end. American Stan­dard was a great growth stock when people went from outdoor to indoor plumbing, but it isn't considered one today. Avon, a cosmetics firm, boomed after the war when the country became more affluent. By the late Sixties, Avon had a multiple of 50, and the market was saturated with many competing cosmetics brands.

Rule 7: Every investor should lose some money, because it teaches you about yourself

1 comment:

Prasanth said...

Read Jim Rogers "Adventure Capitalist" recently and here are some of his predictions :

1. He is very very bullish on China and predicts that Chinese growth is going to explode on the coming years.

2. He basically dismisses India saying that India will break up into smaller countries in 15 to 20 years time.

Well, lets see about that