October 19th, 2009
05:11 AM GMT
Sometimes I think if you want to be a serious investor, you shouldn't become a business journalist. Sure, you learn a lot about various industries and get insightful advice from experts at the top of their game. On the other hand, you know all too well how everything can go terribly awry.
Jim Rogers, the famed commodities investor and author of new book "A Gift to My Children: A Father's Lessons for Life and Investing," admitted to me that he is a horrible short-term investor. However, he says you don't need to be a good trader to make money.
Here are his tips for anyone looking to invest in the current economic crisis:
1) Buy what you know. "You should only buy things that you yourself know a lot about - whether it's cars, sports, hairdressing, fashion, or whatever it is," he told me. "Do some research, do some homework, and if you see something really dramatic changing that is cheap, buy it. You are going to know about it long before I am, long before a broker on Wall Street is, and that is how you are going to make a lot of money. "
2) Don't be cocky. "Being overactive is usually a mistake," Rogers mused. "It always leads to problems. People don't like it. They want to jump around all the time. That's not the way to succeed as an investor."
3) Buy low, sell high. "It's as simple as that," he said. "Nobody likes to hear it. Now that is so simple and so easy, but you cannot believe how difficult it is to buy low and sell high. That is the hard part."
So what is Rogers doing with his money?
He wouldn't buy stocks today - not even in emerging markets. He is selling the U.S. dollar because "it's a flawed currency." Today, he would put new investments into commodities or what he thinks are "sound" currencies such as the Canadian dollar and the Japanese yen. And one of his favorites - farmland. With food prices rising, he believes farmland "may be one of the best investments a person can make in 2010." But get to know the farmer and the industry first, he reminded me.
In other words, be sure to do your homework.
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