5 Thoughts On Investing From Jim Rogers

Jim Rogers, a commodities investing guru, has some thoughts to share about investing, whether it’s exchange traded funds (ETFs) or stocks. He’s also got some strong opinions on consumers and where the global economy is headed.

David Bogoslaw for BusinessWeek got to interview Rogers right around the time his new book, A Gift to My Children: A Father’s Lessons for Life and Investing, was published in April.

Here are investment tips and thoughts from the veteran investor/world traveler:

• People who invest in any type of security should be thoroughly educated and interested enough in the subject that they investing in to know their way around. Otherwise, why invest? Furthermore, before seeking advice, do some research on your own so you can better evaluate that advice.
• Diversification  is overrated because you can go broke trying to diversify. Henry Ford never diversified, Bill Gates didn’t diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket. (For the record, we still encourage investors to remain diversified, stick to having entry and exit strategies and watch the trend lines. Diversification is your friend.).
• Although citizens of the United States should raise their savings rate, closer to one-third of their annual income, Americans never will. About 30 years ago, America was saving about 9%-10% of its income, and then came the dawn of excess.
• It would be better to let some of the big banks fail now, rather than wait for six or eight of them to fail at the same time. The system will recover from bankruptcies.
• The commodities cycle has further to go. This is the only sector in the world where the fundamentals are getting better. Agricultural commodities are still the most historically depressed.

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