So you reject the advice about diversified portfolios?
Diversification is something that stock brokers came up with to protect themselves, so they wouldnâ€™t get sued [for making bad investment choices for clients]. Henry Ford never diversified, Bill Gates didnâ€™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.
You can go broke diversifying. Ask anyone whoâ€™s diversified in the last three years. Theyâ€™ve lost money. Non professionals are always jumping around, thinking they have to do something. If they have a big success, they think they need another one right away. Thatâ€™s when hubris sets in at its worst. Thatâ€™s when people really should go to the beach. It happens to me too.
Investing Q&AApril 14, 2009, 7:17PM EST
Jim Rogers: How He's Investing After the Crisis
You've spoken a lot about the 21st century belonging to China and the investment opportunities there. As the Chinese middle class grows, do you expect a big change in Chinese savings habits as they become more able to afford consumer goods?
Look at Japan's and Korea's extremely high savings rates. Those have come down as those countries have become more prosperous. China is developing [social] safety nets now. When you have safety nets, there's less reason to have very high savings. That will happen in China as well.
China is maybe one fifth the size of Europe's economy. China can't save the world, no matter what they do.
They are investing in their own economy and have huge reserves and huge savings, The World Bank has predicted that in 2020, China will be the world's largest economy. But the World Bank has never been right about anything. It could well happen in the next 10 or 20 years, but on a per capita basis probably not within my lifetime, unless the U.S. really collapses and China really booms
Your favorites are agricultural commodities?
The prices historically are still very depressed, compared with most other commodities. I bought all commodities recently, but I probably bought more agriculture than anything else
4 Tips for Buying Stocks in A Recession
Equities tend to outperform other asset classes and should not be entirely ignored - even during periods of recession. If this sounds scary, don't worry: it is possible to choose the right investment candidates and to mitigate risk during tough economic times.
In fact, in a January 2008 Washington Post story entitled "Five Myths About That Depressing R-Word", Kevin Hassett writes: "With the economy heading south during recessions, the conventional wisdom is that stock prices drop as well ... However, the market tends to look ahead and starts to respond favorably to the expected end of a recession long before it occurs. Influential economist Donald Luskin of Trend Macrolytics recently ran the numbers and found that stocks have produced an average return of 12.1% in post-World War II recessions. This is only slightly below the average return outside recessions"
Keep reading for some tips on how to invest in a troubled economy.
During recessionary periods, individuals aren't able to spend as much money on high-tech gadgets or big-ticket items, such as cars or high-end electronics; instead, people tend to put their dollars toward necessities, such as food or utilities. In addition, according to a McGraw-Hill study of advertising performance, companies that can afford to advertise will win consumers at the local markets, regardless of bran- name recognition pre-recession, making them strong contenders for your portfolio.
How to make money trading stocks during recession
The global financial crisis is gradually and consistently taking its pound of flesh from every nook and cranny of the world. Not even Warren Buffett could believe the effect of the global meltdown. Africa, as usual, is not prepared for any eventuality. We are always cut unawares. God will definitely help us but I think we have to first take a bold step forward. Some countries claimed, probably relying on archaic economic text books, that they were immuned to the meltdown. The stock markets were not left behind in the struggle to be left off the hook of the hangman but the he had already arrived. It was too late. Gradually the meltdown came. Consistently it spread to the whole world.
The good news, however, is that there are great opportunities in a meltdown. Like in all situations, there are always opportunities in adversities. It depends from which angle you are viewing it, and on which side of the coin you are looking at. People, including nations will always benefit from others misfortunes or miscalculations. They will see opportunities where others are seeing problems. They will see profits where others are seeing losses. To be on the winning side requires a great skill. You must have a second eye or probably additional eye to enable you see beyond your peers. You need education. You need to read wide. You need to see what humans are not seeing.
The stock market worldwide, over the years have proved to be a market that transforms peopleâ€™s lives. People have made fortunes from the stock market just for buying and selling stocks. The market had produced millionaires. One must not also close his/her eyes to the fact that some people had burnt their fingers in the stock market due to bad investment decisions. People invest in the stock market for various reasons. There are short-term and long-term investors. Whether one is in the stock market for a short or long term basis, there are guiding principles one must not ignore, especially in this global financial meltdown, if he/she must survive the in the market.
Determine your purpose and mission for trading in the stock market. Decide whether it is for short or long term basis. This will enable you to know when you are over-staying in a particular stock, especially if your plan is to buy and sell as quickly and profitable as possible i.e. short term investors. The long term investors are not usually bothered by fluctuations in the market, so far that the company they invested in, is not planning to close down. They are contented with yearly dividends and bonus issues.
Make an investment plan and stick to it. This will help you to become disciplined and will also help you organize your time and investments. You should plan which companyâ€™s stock to buy by conducting an appropriate research on the company. You should also consider why and how much to invest in each particular stock.
As an investor in the stock market, you should cultivate the culture of independence. Even though it is advisable to consult with other traders, it is necessary that you control your emotions at all times and do not allow fear and greed to affect your trading decisions. You should understand that, like in any other business, it is not possible to win all the time. You only need to improve your win to the losing trade ratio. Learn to stay in the present and view events truthfully. In the event of any loss, do not regret, rather you should review your past actions so as to determine how to improve on your performance.
Never stop improving yourself in areas that can benefit you financially. It is not out of place to take classes or reading latest events to improve your skill. You should continue improving yourself in the areas that can help you increase your ability to increase your wealth year after year.
Do not trade on emotion. Trade based on facts and research. It is advisable to do your homework properly. Donâ€™t follow â€œtipâ€ or advise from a neighbor. Novice investors are always victims of this mistake.
Subsequent write-ups will discuss the methods of analyzing stock and strategies for picking a good stock.
Warning: Know your risk tolerance level. This will reduce panic buying/selling. Remember to invest what you can afford to lose.
The above post is not meant to influence anyone\\'s decision to buy/sell/hold/ rotate any stock or commodity.
Please do your home work before take any decision
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