I’ve only recently gotten to learn and know more about Jim Rogers, the famous trend spotter who was also the cofounder of Quantum Fund with George Soros back in the 1970s.
If you do not know of nor heard about Jim Rogers, you can visit his website, The Millenium Adventure and see some of his published books and other works there.
This week’s The Edge did a feature on Jim Rogers and I savoured the article. It’s a good 3-pager and I learned some bits and pieces just by reading the feature article.
But what I found to be a surprise is that Jim Rogers does not believe in diversification when it comes to investment strategies. In his interview with The Edge, this is what he said:
“Look, nobody ever got rich diversifying,” he says a little defensively. “Diversification was something hare-brained investment advisers came up with so they could sell all sorts of fancy investment products and charge big fees. Henry Ford never diversified. You need to identify a good investment trend and stick with it.” Even legendary billionaire investor Warren Buffett, who runs diversified conglomerate Berkshire Hathaway, isn’t spreading his risks just for the sake of diversification, Roger says. “Buffett would tell you that he buys a lot of things that have similar characteristics.”
So what did you think of that? It makes sense but dare we not diversify after having been told for the longest time that we should and we must?
{ 4 comments… read them below or add one }
Never heard of Jim Rogers. LOL. But all I can say is, if one wants to be rich, don’t diversify and don’t speculate. It takes a lot of luck to speculate successfully. Invest most of your $$$ into the few industries u know very well. If you want to play safe and gain a decent % per year, then go for a diversified portfolio. Less risk, less gain.
Kiyosaki also does not diversify. Remember how we should think like the rich? Time to re-look at our investment portfolio and realign them to the rich then!
Alvin, I agree. Speculation really isn’t the game for most people. For those who made it rich by speculation, they are some of the lucky ones indeed!
Financial Fool, if only we can get our hands on the kind of portfolio these rich investors are having…
Says Buffett, “If you are not a professional investor, if your goal is not to manage money in such a way that you get a significantly better return than world, then I believe in extreme diversification. I believe that 98 or 99 percent — maybe more than 99 percent — of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs. All they’re going to do is own a part of America. They’ve made a decision that owning a part of America is worthwhile. I don’t quarrel with that at all — that is the way they should approach it.”
http://peterlim80.blogspot.com/2008/12/what-warren-buffett-says-about.html