Jim Rogers wrote a book for his daughters, teaching them the way of life to achieve success and happiness. Here are the things I learned from the book:
About Life
Passion is key to happiness
“Try as many things as you can, then pursue one (or two, or three) about which you’re passionate. I became successful in investing because this is what I enjoyed most… The quickest way to success is to do what you like and give it your best. For me, my love for investing was linked to my fascination with researching and learning in detail what was happening in different parts of the world… The least-happy people I know are those stuck in jobs they don’t love; many because they can’t imagine giving up a paycheck… People who follow their passions do not “go to work”. They get up each day and cannot wait to have more fun doing what they love to do… Even if you don’t become wealthy pursuing your passions, you will be rich with satisfaction. Plus, you’ll be happy. You can’t put a price on that.”
Have a dream
“In addition to finding a fulfilling vocation, you must have a dream. In my younger days, I though that making money was fun, but I didn’t really have a plan beyond that. Had I continued down that path, I would have lost interest by now… when you begin something, you may not always have a concrete picture or vision of the future. But if you continue to be passionate and work hard at what you truly love to do, then you will eventually find that dream.”
Do not be ignorant
“Ignorance is born of an outsized sense of self-importance. Never let yourself become arrogant. Study hard. The more you learn, the more you will realize how little you know – and armed with this humility, you will never lose sight of the distance that separates self-confidence and self-importance.”
Pursue your dreams
“I want you to pursue, without pause, whatever it is that stirs your passion. Keep working toward your dream, not someone else’s, and not mine, either. A lot of people try to live for others – their children, their spouses, their parents, their friends – and in doing so twist themselves into knots attempting to meet their often outsized and/or unrealistic expectations. That leaves little space for personal growth and progress, and creates resentment for lost opportunities.”
On Investing
Due Diligence
“If you just read the annual reports of companies, you will have done more than 98 percent of investors. If you read the notes of the financial statements, you will be ahead of 99.5 percent of investors. Verify those financial statements, as well as future projections announced by the top executives, by doing your own legwork. Talk to customers, suppliers, competitors, and anyone else who might affect the company. Do not invest unless you can say with absolute certainty that you are more knowledgeable about this particular firm than 98 percent of Wall Street analysts. Believe me, it can be done. But only with the extra effort.”
“If one (currency black market) exists, then you know the country has problems. Black market exchange rates exist only when the government is imposing artificial controls. The difference in parity between the official currency rate nad the black market rate indicates the gravity of the problem in that nation.”
The importance of history
“In my course “Bull and Bear” at Columbia University, I instructed students to research major bullish and bearish markets of the past, then figure out which historical events had contributed to their rise and fall. What was going on in the world when prices skyrocketed or plummeted? Why did those events serve as a catalyst? Looking back upon history is an invaluable way to learn how to analyze trends. And better still, it teaches you how to anticipate future changes.”
The rise of China
“When we look back upon history, we know that Spain dominated the sixteenth century, while France was the more prosperous country two hundred years later. The nineteenth century was the century of Great Britain. In the twentieth century, the United States rose to prominence. Well, the twenty-first century belongs to China.”
Careful with shorts
“You need to careful though, that you are not selling short simply because prices are high. Never sell short unless price are astronomically expensive, and you detect negative change coming.”
Do not follow the crowd
“When you see so many people being unrealistic, stop and make an objective assessment of the supply-and-demand equation. Bearing in mind this basic principle will bring that closer to success… Anytime that you think you’ve become a financial genius – when, in fact, you simply have had the good luck to turn a profit – it is time to sit back and do nothing for a while. If you stumble upon success in a bull market and decide that you are gifted, stop right there. Investing at that point is dangerous, because you are starting to think like everybody else. Wait until the mob psychology that is influencing you subsides.”
Debasing currency does not work in the long run
“Throughout history, many countries have tried debasing their currency as a way to revive the economy by making it a bit more competitive. It has never worked over the long run or even immediately. It can work in the short term, but not always.”
A good summary of the whole book!