Jim Rogers Fund Made 4,200% While The S&P 500 Only Returned 47% by Lars Haugen
I recently re-read the book “Street Smarts” by Jim Rogers. It’s an excellent book. In it Rogers shares his timeless advice on investing and life, and I believe the lessons are so important that I decided to summarize them in this article. In a few minutes you will learn how one of the best investors in the world thinks and invests. If you are interested I suggest you read the full book.
I was first introduced to Jim Rogers when I was 16 or 17 years old. My dad had bought a book called “Hot Commodities” and for some reason I started reading it. I had no knowledge of, nor any inclination to invest in, commodities.
But I am extremely happy I read it. Apart from Buffett, Jim Rogers is the investor that has affected my thinking the most. In fact Buffett and Rogers are my two favorite investors of all time.
If you are already familiar with Rogers I’m sure you know why I respect him, but in case this is your first time learning about him I’ll give you a short intro.
Jim Rogers is one of the best investors in history, and that’s not an exaggeration. He co-founded the Quantum Fund with George Soros and between 1970 and 1980 the fund gained 4,200% while the S&P 500 only gained about 47%.
Rogers “retired” in 1980 at the age of 37 and has invested personally ever since. He has been in the business for more than half a century and his knowledge is unparalleled. He is one of the best thinkers in the industry
One of the things I appreciate most about Rogers is that he is unfiltered. He says it like it is, which is refreshing in a world where a lot of the financial news is BS. There are tremendous lessons to be learned from Rogers.
As the article is based on notes from a book I decided to break the article down into different headings. Furthermore, at certain points I simply present the facts as stated in the book because it makes the article shorter and easier to read.
I hope you enjoy it
P.S. I recently wrote a free guide called “3 Simple Must Read Books That Are Guaranteed To Make You A Better Investor.” Click the link to get the guide.
On Success And His Career
In ancient times the Greeks said “nothing endures but change”. Rogers says that success in life is measured by the ability to anticipate change. As an investor you must be able to think around corners. The way you accomplish this is by becoming an expert within an industry or field.
Rogers thrives on digging up information and this leads him to find information that others don’t. That is one of his competitive edges. And he works harder than most people (or at least he did when he was younger). He says that persistence is what makes the difference. You have to put in the hours and do it consistently. In that way you are able to see trends before others, which is one of the Rogers’ traits. He is able to see big trends before they happen, but he is usually 1-3 years early.
In school Rogers’ approach to studying was to do as much as possible so that he knew the subject by heart, then study some more just to be sure. There is no such thing as enough, just keep studying, researching or whatever the task is. When he did his undergraduate degree at Yale he was asked by another student how many hours he had studied for a particular test and he found the question strange because he hadn’t stopped studying. He just kept going.
Rogers does not think you should study economics or finance to become a successful investor, and he thinks getting an MBA is a bad decision, especially if you want to go into business. He believes you should study history and philosophy. History gives you a precedent that you can compare current market events to – history doesn’t repeat, but it rhymes. Many of the world’s best investors are students of history.
As for philosophy, investing is mostly a game against our own psychology, and learning some models to deal with our psychological weaknesses is extremely helpful. In fact, Charlie Munger has identified 25 common psychological causes of human misjudgement. Most investors lose money because they don’t practice the mental game. The truth is that we are hardwired to be bad investors (following the herd used to be a survival mechanism, today it’s a recipe for bad investing). As investors we have to constantly practice mitigating our own stupidity.
On Working on Wall Street
Hard work and intelligence is abundant on Wall Street, and everyone makes money during bull markets (there’s nothing like a bull market to think you’re a genius). But Rogers says that these people don’t last because they can’t make money in bear markets. They get bounced out of the industry. Persistence and perseverance is absolutely essential. And to succeed you have to be extremely curious, and also skeptical.
Rogers took a 75% salary cut to start the Quantum Fund, but money was irrelevant for him. His advice for people who are looking for a job is to first determine if the job is right for you, before discussing the salary. If it is the right job for you, Rogers assures that the money will come.
Rogers benefited from being an assistant. He believes the wise course is to start working for someone, and keeping your eyes and ears open. In my personal opinion the majority of millennials today are entitled (and I am speaking from experience). We believe we know everything and that the world owes us something because we have a university degree (or two). But the reality is that “everyone” has a degree these days.
Rogers studied growth investing under one guy, and trading under another. In both cases he was out of his comfort zone, which increased his knowledge. There are many ways to make money on Wall Street, so find the best way for you. And the way to find it is by testing different strategies.
On Going Bankrupt
Rogers went bankrupt in 1970, when he was 27/28 years old.
He says that you shouldn’t worry about losing money or making mistakes. It’s good to go broke at least once, preferably twice. But do it early in your career, when you don’t have much money to lose. Losing everything is good because it teaches you how much you don’t know. There is nothing wrong with failing if you learn from your mistakes.
I have personally made several mistakes that make me cringe when I think of them. The mistakes were a result of my greed, impatience, ego and testosterone. Not a good cocktail. In fact, one big problem that I see with the investing industry is that people don’t admit mistakes (how often do you see people on CNBC or Bloomberg admitting they were wrong?). The people who admit to their mistakes are usually the most successful investors. Buffett loves to talk about his blunders. He has been investing for