Jim Rogers appeared in a Chinese talk show some time back (see video below – Thanks to Jimmy and Dennis). When asked what are the 3 keys to investing, he mentioned the following:
#1 – Skeptical
Be skeptical of what experts, analysts, journalists, reports, brokers, fund managers, financial advisers, professors, etc, say. He mentioned that 80% of the finance professionals underperform against the market averages. Hence, there is no point in listening to them. An investor must have an independent mind, not get swayed by comments and advice. You must believe in yourself, your research and investment method. You need to go against the crowd to make money.
Transcript: “Because you have to disbelieve everything you hear. You have to figure out for yourself what is right and what is wrong. What is going to make you money? Don’t listen to other people. Don’t listen to me, don’t listen to you, don’t listen to professor, listen to yourself. Well, many studies have shown, over and over again, 80% of the professional investors do not do as well as the market averages. Mainly because they always follow each other, they follow the crowd, instead of willing to go against the crowd. You have be willing to go against the crowd to make money. I say again, all of the studies show, 80% of professional managers do not do as well as the averages do. That is the fact, all over the world, China, Europe, America, everywhere.”
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#2 – Curiosity
Be curious enough to do research and find out more about potential investments. To buy low, an investor must find out the discounts before the majority do. Only by doing your own work, you have the confidence to stick to your investments.
Transcript: “The way you make money is to figure out what is going to happen before other people do. You are curious about life, about what’s happening. You go out and ask questions and see what people are doing before other people figure out what people are going to do… What you have to do is you go out to see what people are doing. I have driven across China several times and I see and seen China has turned into a great country. Not even the Chinese know how great your country is going to be. Because you have not driven around your countryside. Most people don’t understand. You go and you see what is happening close to the ground and you will be able to predict the future. Not always, I make a lot of mistakes but that’s how you make a lot of money. You figure out before other people do. Don’t follow the big money. The big money is always wrong. Don’t try to speculate. Don’t try to manipulate. Figure out before the big money, what’s going to happen and you are going to be very, very rich.”
#3 – Persistent
Every investor makes mistake once in a while. Even Jim Rogers does. But it is important not to stay at it. Continue to be skeptical and curious. It is difficult to not get affected by mainstream thinking and influence. Do your homework and research diligently.
Transcript: “First of all, you have to stay at it. Because you gonna make losses every once in a while. You have to persist in finding out your information. This is not an easy business. You have to figure out things before other people do and that takes a lot of work. You have to be willing to stay at home and work while others are looking around, writing articles about manipulation. You have to figure out things in advance and that is hard.”