What are the principles for successful investment?
Jim Rogers is an undisputed master of investment. The hedge fund he co-founded with George Soros in 1973 achieved a return rate of 4,200% within ten years. He successfully invested in crude oil twice, in 1971 and 1998, and in both cases, the price of crude oil rose more than tenfold over the following decade. In 1988, he first purchased Chinese stocks when China’s stock market was still in the over-the-counter trading era. Buffett praised him as an investor with an unparalleled ability to grasp major trends.
Jim Rogers offered several principles for successful investment, including working hard to accumulate wealth, becoming an expert in a specific field, investing cautiously and then waiting patiently, and learning history and philosophy. These principles are crucial for achieving success in investment.
Work hard to accumulate wealth
Rogers believes that young people have very limited assets, so the first step is to learn how to save money and accumulate capital. Wealth is not something one is born with; therefore, one must work hard and accumulate capital through professional success. While everyone dreams of becoming rich overnight, this is far from easy, so it is essential to be patient and wait for the right opportunity. A successful investor often spends most of their time waiting and does nothing else. When the opportunity arises, they invest decisively, and then continue to wait.
Become an expert in a specific field
The next piece of advice Rogers offers is to thoroughly research the field you plan to invest in and only begin investing once you become an expert in that area. Most people invest based on information from television or the internet, such as hearing “Apple’s stock is cheap” or “it can rise to $30,000,” and jump into investments. However, making money is not that simple.
“You can choose an investment field based on your interests—fashion, automobiles, sports, cuisine, anything goes. If you’re interested in fashion, you can gather relevant information through books or online research. Then, remember not to lose interest after just three minutes; instead, persist over the long term. If you can do this, you will naturally develop the perspective and mindset of an investor.” Rogers said.
Rogers also emphasized that you may feel the urge to boast about your ideas or discoveries to friends and family, but at the beginning, keep them to yourself and quietly investigate promising opportunities or companies in the relevant field. Of course, don’t be inconsistent; persistence is key. By doing so, you’ll be able to identify promising opportunities or companies before analysts on London’s financial street or Wall Street.
Rogers added, “Moreover, do not buy investment projects recommended by others. Investments should be based on your own research. Blindly following others’ advice will lead to losses.”
Invest cautiously and then wait patiently.
Rogers believes that if you only had 20 investment opportunities in your lifetime, you would undoubtedly be much more cautious and avoid reckless investments. Before investing, you would thoroughly investigate until you felt absolutely confident. This is the essence of successful investing: conducting comprehensive research before making prudent decisions.
Another crucial piece of advice is to learn to stop in time after selling stocks. Typically, after one investment ends, people immediately jump into another. Especially after making substantial profits and becoming overconfident, it is vital to know when to stop. Do not immediately shift focus to the next trade but remain consistent and concentrate on the current transaction. Learn to calm down and wait, using this period to start re-educating yourself, and then invest cautiously when new opportunities arise. However, many lack the patience and rush into action, resulting in failure. If you simply cannot wait, you might as well relax and enjoy a beer at the beach.
In fact, 'learning to wait' is also a critical factor in an investor's success. For investors, a key point is the ability to stay calm and observe developments most of the time. Right after gaining profits, the next excellent investment opportunity will not appear immediately. Therefore, one must calmly wait with patience. This is why imagining having only 20 investment opportunities in your life allows you to wait peacefully for the next opportunity.
Investing in gold and silver is the right approach to address uncertain times.
Rogers began purchasing gold in the summer of 2019 and has continued to buy since. He believes that historically, whenever confidence is lost, the prices of gold and silver tend to surge dramatically, just as everyone needs health insurance and life insurance. Similarly, everyone should hold gold and silver as part of their investment portfolio.
"I never want to use my health insurance or life insurance in my lifetime, but having them gives me peace of mind. Gold and silver should play a similar role within an investment portfolio."
Study history and philosophy.
Rogers believes that to succeed in investing, one must look ahead and engage with the future. Thus, understanding history becomes a powerful tool. Learning from past events equips us to handle what lies ahead, as the future is often an extension of the present. Studying history is about understanding humanity itself, which means understanding crises.
Rogers says that when teaching his children history, he often reminds them not to rely on a single source of information. They must gather information broadly and learn to piece together fragmented details. Why can't we depend solely on one source? Because all history is written from the perspective of the country in question.
Moreover, studying philosophy is also of great importance. Philosophy is a discipline concerning the essence of humanity and society. To understand the future, one must understand humanity. Therefore, studying history, reading literary works, watching films and plays, and gaining insights into human nature are crucial endeavors.
"Buy low, sell high"
There is no "foolproof" rule in investing, but it is not overly complicated either; simply put, it is about "buying at a low price and selling at a high price." While this may sound simple, executing it is quite challenging. This is because the majority of people only focus on bull markets while paying little attention to bear markets. Consider whether this applies to you—when observing rising stock prices during a bull market, many only jump in after some time has passed.
Rogers, on the other hand, often focuses on bear markets, identifying stocks that are nearing their bottom. When others are caught up in a frenzy, he remains calm, seeking out overlooked low-priced stocks. In 1973, he co-founded a hedge fund with George Soros, investing in relatively inexpensive stocks and commodities. These investments proved highly successful, yielding returns of up to 4200% over a decade.
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Editor /rice