Investment guru's funds wiped out in his 20s

Investor Jim Rogers, commodity king - talking about his investing style and how he developed it.
Investor Jim Rogers, commodity king - talking about his investing style and how he developed it.ST PHOTO: ONG WEE JIN
Jim Rogers (left) with his older daughter, Happy Rogers.
Jim Rogers (left) with his older daughter, Happy Rogers. ST PHOTO: ONG WEE JIN

We kick-start the first week of the revamped Sunday Times by asking leading investors to talk about their investment philosophy and explain how they developed their styles. This is the first of a four-part series on investing by different groups, including fund managers and young investors.

Renowned investment guru Jim Rogers has said it before and he will say it again: His best investments are his two daughters, Hilton Augusta and Beeland Anderson.

"You can ask me in 30 years if it's a good investment but so far it's the best investment I've ever made.

"They make me very happy and if you can find anything makes you happy, it's priceless. I don't know of many things like that.

"I could buy a diamond or stock but it wouldn't make me happy all day long, every day."

Mr Rogers says his daughters, who are 12 and seven, have taught him more than any other investment could have, about life, people and even his parents.

CHEAP BUYS

My approach is that I usually like to find things that are cheap, where there's a positive change taking place, then I do my research and make my investment.

INVESTMENT GURU JIM ROGERS, on his style of investment

When he started investing in his early 20s, he found that the most difficult thing was "that I thought everybody else knew what I knew".

Mr Rogers recalls: "There was a time I came to a conclusion that I should sell the market short and I did." He put all his money into put options, thinking the market was going to decline and, within four months, he had tripled his money.

"I thought this was easy, I'm going to be rich and I sold my puts and waited for the market to rally, and sold short six companies."

But they went up and his funds were completely wiped out and, eventually, in the next two years, all those companies went bankrupt.

"I was wiped out, even though I was right because I assumed the market knew what I knew." He says he is not the first to find out the market can stay irrational.

Q How did you decide on making investing your life-long career?

A When I started working on Wall Street, I knew nothing about it and I had no money at all. I just took a summer job on Wall Street in the beginning.

Then I fell in love with investing. I thought it was wonderful. I would say I started when I was 21; I started in a small way by saving and I bought some IBM shares. I didn't know much, I thought IBM would be a great company.

Q What captivated you about investing?

A All my life I had an interest in what was going on in the world, and what would be happening in the world, and here was a place that they would pay me to know about the world, to anticipate andpredict what was going to happen .

I was a confused university student and once I found out about the investment world, I did not go to a law, business or medical school. I went to Wall Street as soon as I could.

Q You are regarded as a contrarian or value investor using a top-down economic model, and you also take short-term losses. How would you describe your style?

A Some of those things are in fact true but if I find a bottom-up investment or any way I find an investment, I'm happy to pursue it. If I see a company doing good things, I can very well start at the bottom and work my way up.

How long did this take? It didn't take me too long to figure out that many people didn't have a clue what they were doing in the investment world. It was hit and miss, so I stopped listening to other people and started doing my own research and investments.

People say contrarian - well, if you find something that's cheap, it usually means not many people are paying attention to it, that is why it is cheap.

If that makes me a contrarian, I'm quite happy to be contrarian.

My approach is that I usually like to find things that are cheap, where there's a positive change taking place, then I do my research and make my investment. I would say I started having my own style by the time I was 28.

Q How did you develop your investment philosophy?

A First, I saw other people making mistakes, and I saw that following other people usually wound up being a mistake.

So I tried to find things that I knew or thought I knew would be successful - usually something that was cheap or had a low valuation, based on however you want to value a stock.

I realised if you find something that's cheap, even if you make a mistake, you're probably not going to lose a lot of money. If you're right, it could go up a lot.

Q What is in your portfolio?

A Things I'm buying now are those that are down. Russia's a very hated stock market, Japan is down 50 per cent from its all time highs, China is down 30 or 35 per cent from its all-time highs.

I started investing in Japan about three years ago, Russia two years ago, for instance.

I bought Zimbabwe shares two weeks ago. That's new, I didn't buy a lot. I haven't bought shares in Zimbabwe for about 25 years. It's a disaster but therefore cheap. What instigated me to start investing there again was that they completely abolished their old currency and started using US dollars.

The real new future in Zimbabwe will happen when President Robert Mugabe leaves. He's an old man and he will leave some day, and that will be the real change.


Guru's strategy: Go for the cheap options

I was a confused university student and once I found out about the investment world, I did not go to a law, business or medical school. I went to Wall Street as soon as I could.

Q You are regarded as a contrarian or value investor using a top-down economic model, and you also take short-term losses.Howwould you describe your style?

A Some of those things are in fact true but if I find a bottom-up investment or any way I find an investment, I'm happy to pursue it. If I see a company doing good things, I can very well start at the bottom and workmywayup.

How long did this take? It didn't take me too long to figure out that many people didn't have a clue what they were doing in the investment world. It was hit and miss, so I stopped listening to other people and started doing my own research and investments.

People say contrarian - well, if you find something that's cheap, it usually means not many people are paying attention to it, that is why it is cheap.

If that makes mea contrarian, I'm quite happy to be contrarian.

My approach is that I usually like to find things that are cheap, where there's a positive change taking place, then I do my research and make my investment. I would say I started having my own style by the time I was 28.

Q Howdid you develop your investment philosophy? A First, I saw other people making mistakes, and I saw that following other people usually wound up being a mistake.

So I tried to find things that I knew or thought I knew would be successful - usually something that was cheap or had a low valuation, based on however you want to value a stock.

I realised if you find something that's cheap, even if youmakea mistake, you're probably not going to lose a lot of money. If you're right, it could go upa lot.

Q Whatis in your portfolio? A Things I'm buying now are those that are down. Russia's a very hated stock market, Japan is down 50 per cent from its all time highs, China is down 30 or 35 per cent from its all-time highs.

I started investing in Japan about three years ago, Russia two years ago, for instance.

I bought Zimbabwe shares two weeks ago. That's new, I didn't buy a lot. I haven't bought shares inZimbabwe for about 25 years. It's a disaster but therefore cheap. What instigated me to start investing there again was that they completely abolished their old currency and started usingUSdollars.

The real new future in Zimbabwe will happen when President Robert Mugabeleaves. He's an oldmanand he will leave some day, and that will be the real change.

A version of this article appeared in the print edition of The Sunday Times on July 05, 2015, with the headline 'Investment guru's funds wiped out in his 20s'. Print Edition | Subscribe