A Gift to My Children by Jim Rogers

[alvin]

Jim Rogers wrote a book for his daughters, teaching them the way of life to achieve success and happiness. Here are the things I learned from the book:

On Investing

Due Dilligence – “If you just read the annual reports of companies, you will have done more than 98 percent of investors. If you read the notes of the financial statements, you will be ahead of 99.5 percent of investors. Verify those financial statements, as well as future projections announced by the top executives, by doing your own legwork. Talk to customers, suppliers, competitors, and anyone else who might affect the company. Do not invest unless you can say with absolute certainty that you are more knowledgeable about this particular firm than 98 percent of Wall Street analysts. Believe me, it can be done. But only with the extra effort.”

“If one (currency black market) exists, then you know the country has problems. Black market exchange rates exist only when the government is imposing artificial controls. The difference in parity between the official currency rate nad the black market rate indicates the gravity of the problem in that nation.”

The importance of history – “In my course “Bull and Bear” at Columbia University, I instructed students to research major bullish and bearish markets of the past, then figure out which historical events had contributed to their rise and fall. What was going on in the world when prices skyrocketed or plummeted? Why did those events serve as a catalyst? Looking back upon history is an invaluable way to learn how to analyze trends. And better still, it teaches you how to anticipate future changes.”

The rise of China – “When we look back upon history, we know that Spain dominated the sixteenth century, while France was the more prosperous country two hundred years later. The nineteenth century was the century of Great Britain. In the twentieth century, the United States rose to prominence. Well, the twenty-first century belongs to China.”

Careful with shorts – “You need to careful though, that you are not selling short simply because prices are high. Never sell short unless price are astronomically expensive, and you detect negative change coming.”

Do not follow the crowd – “Whe you see so many people being unrealistic, stop and make an objective assessment of the supply-and-demand equation. Bearing in mind this basic principle will bring that closer to success… Anytime that you think you’ve become a financial genius – when, in fact, you simply have had the good luck to turn a profit – it is time to sit back and do nothing for a while. If you stumble upon success in a bull market and decide that you are gifted, stop right there. Investing at that point is dangerous, because you are starting to think like everybody else. Wait until the mob psychology that is influencing you sudsides.”

Debasing currency does not work in the long run – “Throughout history, many countries have tried debasing their currency as a way to revive th economy by making it a bit more competitive. It has never worked over the long run or even immediately. It can work in the short term, but not always.”

The rest at http://www.bigfatpurse.com/2010/06/a-gi ... im-rogers/

[Dennis Ng]

Jim Rogers wrote a book for his daughters, teaching them the way of life to achieve success and happiness. Here are the things I learned from the book:

On Investing

Due Dilligence – “If you just read the annual reports of companies, you will have done more than 98 percent of investors. If you read the notes of the financial statements, you will be ahead of 99.5 percent of investors. Verify those financial statements, as well as future projections announced by the top executives, by doing your own legwork. Talk to customers, suppliers, competitors, and anyone else who might affect the company. Do not invest unless you can say with absolute certainty that you are more knowledgeable about this particular firm than 98 percent of Wall Street analysts. Believe me, it can be done. But only with the extra effort.”

“If one (currency black market) exists, then you know the country has problems. Black market exchange rates exist only when the government is imposing artificial controls. The difference in parity between the official currency rate nad the black market rate indicates the gravity of the problem in that nation.”

The importance of history – “In my course “Bull and Bear” at Columbia University, I instructed students to research major bullish and bearish markets of the past, then figure out which historical events had contributed to their rise and fall. What was going on in the world when prices skyrocketed or plummeted? Why did those events serve as a catalyst? Looking back upon history is an invaluable way to learn how to analyze trends. And better still, it teaches you how to anticipate future changes.”

The rise of China – “When we look back upon history, we know that Spain dominated the sixteenth century, while France was the more prosperous country two hundred years later. The nineteenth century was the century of Great Britain. In the twentieth century, the United States rose to prominence. Well, the twenty-first century belongs to China.”

Careful with shorts – “You need to careful though, that you are not selling short simply because prices are high. Never sell short unless price are astronomically expensive, and you detect negative change coming.”

Do not follow the crowd – “Whe you see so many people being unrealistic, stop and make an objective assessment of the supply-and-demand equation. Bearing in mind this basic principle will bring that closer to success… Anytime that you think you’ve become a financial genius – when, in fact, you simply have had the good luck to turn a profit – it is time to sit back and do nothing for a while. If you stumble upon success in a bull market and decide that you are gifted, stop right there. Investing at that point is dangerous, because you are starting to think like everybody else. Wait until the mob psychology that is influencing you sudsides.”

Debasing currency does not work in the long run – “Throughout history, many countries have tried debasing their currency as a way to revive th economy by making it a bit more competitive. It has never worked over the long run or even immediately. It can work in the short term, but not always.”

The rest at http://www.bigfatpurse.com/2010/06/a-gi ... im-rogers/

Hi Alvin,

thanks for sharing. Actually, for me, when I wrote the book "Mastering Your Personal Finance", I also did think what are the things I want to teach my children about Personal Finance.....

Now my children are still young and cannot really understand what I wrote in the book, but when they are ready, I'll be delighted to share with them what I learned about Personal Finance and Life in general...