Basic Concepts from Jim Rogers

Jim Rogers is a famous investor profiled in Market Wizards. Born in Baltimore, Maryland, Rogers grew up in Alabama and came of age at Yale and Oxford. While at Oxford, he began investing and became quite adept at spotting trends. He co-founded the Quantum Fund with George Soros in 1973. Between 1973 to 1983, the Quantum Fund gained 4200% while the S&P gained 47%.

The following is a listing of basic concepts from Rogers:

1. Buy value. If you buy value, you will not lose much even if your timing is wrong.

2. Wait for a catalyst. Bottoming markets can go nowhere for very long periods of time. To avoid tying up your money in a dead market, wait until there is a catalyst to change the market direction.

3. Sell hysteria. Wait for hysteria, examine to see whether the market is wrong, go against the hysteria if fundamentally validated, be sure you are right, and then hold on tight.

4. Be very selective. Wait for the right trade to come along. Have the patience to sit on your money until the high probability trade sets up exactly right.

5. Be flexible. Biases against certain markets or types of trades limit your field of opportunity. A trader who says, "I will never go short," has a distinct disadvantage compared to the trader who is willing to go short as well as long.

6. Never follow conventional wisdom. Keep this principle in mind and you will be less likely to buy stocks after the Dow has already moved from 1,000 to 2,600 and everyone is convinced that there is a shortage of stocks.

7. Know when to hold and when to liquidate a losing position. "The first loss is the best loss."

Have a great holiday weekend!

Wink

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