The famous billionaire investor and co-founder of the Quantum fund, Jim Rogers, in his book Make Your Children Successful, gives good advice that is suitable not only for young but also for adult investors.
UNDERSTAND THE SITUATION YOURSELF
‘At the beginning of my investing career, I made a serious mistake by following the advice of my colleagues on several occasions instead of going into the details and making an informed decision myself. It’s because that as a newcomer to Wall Street, I assumed that the more experienced entrepreneurs had a lot more knowledge. Do you know what happened? Every investment I made failed’.
DO NOT BE AFRAID to go against the flow
‘Of course, going against the flow is difficult, but experience shows that most of the stories of people who have achieved long-term success start with this.
Let me give you an example … Once we were sitting in a fashionable restaurant in Manhattan, and the meeting organizer asked each participant to advise him on an investment. Almost everyone spoke in favor of growth stocks. My advice was to invest in Lockheed, an aerospace company that was going through difficult times. Several years have passed and Lockheed Corporation shares have jumped a hundredfold for this time’. “
BE ATTENTIVE TO trifles
‘In an investor’s job, like in life, it’s the little things that often determine whether or not you succeed. So be careful! Don’t ignore any question or intuitive fear. Most of the mistakes people usually make because either they did not fully investigate the subject of interest, or their reasoning was incorrect and incomplete, or they did not have access to the necessary information’.
EXPLORE THE MAXIMUM OF COMPANY INFORMATION
‘In investing, every financial document that comes into your hands is important, even if it’s just a notebook. Check all financial statements and forecasts yourself without being above hard work. Talk to suppliers, competitors and everyone who interacts with them. Don’t invest until you feel that you understand the current situation in the company better than 98% of Wall Street analysts’.
DON'T IGNORE BEARS
‘What is the mistake of most investors? They follow bulls and ignore bears. As an investor, I am always looking for something that looks ‘bearish’. When people are crazy about an overheated market and miss out on other opportunities, I find a great investment’.
‘To be a successful investor, in addition to history and philosophy, you also need to understand psychology. Very often it is emotion that drives markets up and down. Always remember that the economy and the stock market are two different things. As Paul Samuelson, Nobel Prize winner in economics, said, ‘The stock market has foreseen nine out of the last five recessions’. People overreact to news and rush to buy or sell, often at the wrong time’.
LEARN TO RECOGNIZE CHANGES
‘For a deal to be super profitable, you need a catalyst. In the investment world, changes serve as a catalyst. Whatever it is, such a change should be noticeable within the scale of the country, industry or at least one company, and besides, its significance should be recognized everywhere at most in a couple of years, or even earlier. If the change is really significant, others will notice it, and the price will rise, reflecting the new conditions’.