Jim Rogers was one of the interviews in Market Wizards that I was very excited to get to. I read Adventure Capitalist and Investment Biker when I was in college and have seen quite a few interviews with him including the one in Michael Covel’s documentary.
I knew going in that Rogers based most of his investments on his world economic views, so I didn’t think it was likely that I’d find any direct similarities between his style and mine. Once again, I was proven wrong. Despite having different strategies, Rogers still echoed the same ideas that have been outlined in almost every interview in this book.
Top 5 Quotes from Market Wizard Jim Rogers:
“Whenever I buy or sell something, I always try to make sure I’m not going to lose any money first. If there is very good value, then I’m probably not going to lose much money even if I’m wrong.”
I thought this contrasted very well with O’Neil’s logic behind buying at specific pivot points. You want to buy when you have the absolute best odds of making money. When you do this, you are less likely to lose money because you have aligned the odds in your favor. This is the reason we look for stock to break out on volume as opposed to establishing a position in the base building stage.
“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people – not that I’m better than most people – always have to be playing; they always have to be doing something.”
I think I have done an excellent job of proving this true in the last two months. I have been sitting in 100% cash since last September while the major indexes and most stocks have declined. Rogers later expands on this quote by saying that he is basically waiting for there to be money lying around for him to pick up. It hasn’t been so simple for me, but I believe that when a new uptrend emerges I will be well positioned to take advantage of it.
“Politicians and people who lose money always look for scapegoats.”
As a general rule, politicians irritate me. However, I thought this quote was fascinating because of the second part. This reminded me of when I used to play a lot of poker a few years ago. Every time I watched someone go broke they would blame the cards, or their luck, or accuse someone of cheating. I see the same behavior in trading. No one ever wants to admit that they made a poor decision.
“Generals always fight the last war. Porfolio managers always invest in the last bull market.”
I found this interesting because it is one of the things that Investor’s Business Daily cautions against. O’Neil regularly points out that the stocks that led the previous bull market are highly unlikely to continue to lead the next bull market. We are constantly watching for younger, faster growing stocks. This keeps up on the cutting edge while some investors are riding RIMM all the way down to zero.
“I saved everything I had and put it back into the market. I didn’t care about a TV or a sofa. The wife got rid of me.”
Rogers struck a personal chord with me here. I am the type of person who will completely poor myself and everything I have into my work. I don’t think it was his intention, but this quote served as a reminder to me that I need to work to maintain a balance between my work and the rest of my life. Most of us work so that we can improve our lives, but if the important people in our lives leave in the process, what is the point?