Following his first motorbike road trip around the world in 1990-92, he embarked on his second road trip in 1999-2001. This time he was on a custom-made Mercedes with his current wife. Unlike the former book, “Investment Biker”, he shed fewer insights on investment philosophy in his second adventure book, “Adventure Capitalist”. Instead, he made more evaluation and analysis of countries and their economies, and how they may perform in the future. As usual, I will only extract the everlasting investment principles that I discovered in the book, “Adventure Capitalist”.
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“Successful investing means getting in early, when things are cheap, when everything is distressed, when everyone is demoralized… To make a killing, you really need to get in during a time of despair.”
“In most places around the world, the currency is like a thermometer. It may not tell you what is going on, but it tells you that something is going on, and you know a country is falling apart when even the government will not accept its own currency.”
“And what success I have had in investing has usually come from buying stock that is very cheap or that I think is very cheap. Even if you are wrong, when buying something cheap you are probably not going to lose a lot of money. But buying something simply because it is cheap is not good enough – it could stay cheap forever. You have to see a positive change coming, something that within the next two or three years everybody else will recognize as a positive change.”
“If I do have strength, it is the ability to look at Industry X or Country Y, on which everybody is really down, and exercise the courage , the sense, the stupidity, whatever it is, to buy it, even though everybody is telling me I am nuts to do so. If people become hostile when you say you are buying, it’s probably the right thing to do. Hostility is a great indicator.”
“[W]hen governments print money, one of the first places the money winds up is the stock market.”
Rogers mentioned that “most of the sound-money governments were replaced by easy-money governments”. “Under the old system, when bad times came, there were certain things countries could do. One, they could print money. It would debase their currency, but that did not matter to the politicians who won the election. The stock market would go up (temporarily), the economy would get better (temporarily), people would have more money in their pockets (temporarily), and everything would be okay (temporarily). They would pay the price later. Another thing governments could do when times got tough was borrow huge amounts of money.”
Rogers’ mantra: “The only successful way to invest is to know what you are investing in, and to know it cold. If you do not know about an apple orchard in Washington, do not get into the apple business.”
“The way of the successful investor is normally to do nothing – not until you see money lying there, somewhere over in the corner, and all that is left for you to do is go over and pick it up. That is how you invest. You wait until you see, or find, or stumble upon, or dig up by way of research something you think is a sure thing. Something without much risk. You do not buy unless it is cheap and unless you see positive change coming. In other words, you do not buy except on rare occasions, and there are not going to be many in life where the money is just lying there.”
“One of the mistakes that many people make in the stock market is buying something, watching it go up, and thinking they are smart. They find themselves thinking it is easy. They take a big profit and immediately go looking for something else. That’s the time they should really do nothing. Self-confidence leading to hubris leading to arrogance – that is when you really should put money in the bank and go to the beach for a while until you calm down. Because there are not many great opportunities that are ever going to come along. Bit you do not need many if you do not make many mistakes.”
“If you learn nothing else in your life, learn not to take your investment advice, or any other advice, from the U.S. government – or any government.”
Rogers is insistent that government should have little intervention in the free market. However, governments around the world have been doing more than what they should – for example, bailing out big companies like AIG during the sub-prime crisis. Instead of letting the fundamentals correct themselves, they preserved the bad apples and let them snowball to bigger ones in the future. “People want the government to do something. And I say the government should do nothing. Reacting to immediate pressures, which is what governments have done throughout history, is invariably the wrong thing to do. Correcting the fundamental problem or letting it correct itself, while temporarily more painful, is the only effective course of action.”
”Everything changes; nothing is permanent, especially one’s portfolio. But all bubbles and manias in the financial markets are the same, and have been throughout history.” “Whenever you hear somebody tell you that investing is different this time, grab your money and run. It is never different. There never is a “New Economy.” There never is a “New Era.”
“It may have been Meyer Rothschild, the German banker and patriarch of the legendary House of Rothschild who, when asked how he got so rich, attributed his success to two things. He said he always bought when there was blood in the streets – panic, chaos – when despondency gripped the markets. (In old man Rothschild’s case, investing amid the turbulence of the Napoleonic wars, the blood was just as likely to be literal as it was to be figurative.) And he always sold “too soon.” He did not wait for enthusiasm to peak. He always knew when to get out, and he got out in time with all his money.”
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