Jim Rogers: Diversification Is A Scam


Veteran investor and world traveller Jim Rogers’ new book, A Gift to My Children: A Father’s Lessons for Life and Investing, will be published by Random House on Apr. 28. BusinessWeek has a marvellous interview with the cantankerous and contrarian Rogers, who now lives in Singapore. 

Among some of our favourite bits of contrarian wisdom:

Diversification is a scam. “Diversification is something that stock brokers came up with to protect themselves, so they wouldn’t get sued [for making bad investment choices for clients]. Henry Ford never diversified, Bill Gates didn’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 who’s diversified in the last three years. They’ve lost money.”

Letting Lehman go wasn’t a mistake. “It would be better to let some of them fail now, rather than wait for six or eight of them to happen all at once. The system can recover from bankruptcies. After Lehman went down, the stock market didn’t really collapse right away. It happened a month later, but people started blaming it on Lehman in hindsight. We’ve got to have some pain. Even if AIG (AIG) and Fannie (FNM) and Freddie (FRE) and Lehman all went bankrupt, it cleans out the system.”

Go read the whole thing>>

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