Jim Rogers Reveals The Key To Being A Successful Investor

People are constantly asking me what to invest in, and I always answer the same way. I say: Do not listen to me - do not listen to anybody.

The way you become a successful investor is by investing only in what you yourself have a wealth of knowledge about.

Everybody knows a lot about something. Cars, fashion, whatever it is - you know a lot about something. If you do not know what it is you know a lot about, just step back and take a look at your daily life.

When you walk into a doctor's waiting room, what magazines do you pick up? If you turn on a television, what kinds of programs do you watch? Soon you will probably figure out what your real interests are, what you are really knowledgeable about.

Now you are ready to become a successful investor. If you are keen on cars, read everything you can about the automobile industry. You will know when something is about to happen that constitutes a major, positive change.

Then start following up. Read more about whatever you find. Maybe a new fuel-injection system is being developed, one that is superior to and cheaper than what is currently in use, and you know that when it goes into production, it will take up a large share of the market.

Or it could be something like a new highway. Maybe people can drive someplace where they could never drive before. Maybe new hotels or shopping centers are certain to open up there. The fundamental strategy is this: stay with what you know and expand on it.

If somebody calls you up and says, oh, my gosh, there is this great new computer process...ignore it. You do not know anything about computers. Cars are what you know.

Concentrate on what you know and any changes you see - you will see a major change coming long before I ever will, long before anybody on Wall Street will, because care are your passion; they are what you are sitting around reading about all the time.

Learn to think in the appropriate terms; this is something new; this is something different; this is a shift in direction. Anything new or different leads to consequences down the road.

You have to learn to think around corners. You will know before anybody on Wall Street when something good is happening. You will also know when to sell, because you will see before anybody else that the great change you noticed a few years ago is starting to reverse itself - someone is building a cheaper product, the competition has intensified.

Let's say you have done that. After ten years you have made ten times your money. Now is when you are most vulnerable. You think: I have to find something else. I have to do it again. This is wonderful. This is so easy.

It is the great mistake people make.

Now and then a time comes when doing nothing is the wisest course.

Most successful investors, in fact, do nothing most of the time. You bought that stock ten years ago, and you did nothing for the next ten years - you did nothing but watch what was going on, nothing but watch for changes.

That is how you make money.

Reprinted from "Street Smarts" Copyright © 2013 by Jim Rogers. Published by Crown Business, an imprint of The Crown Publishing Group, a division Random House LLC, a Penguin Random House Company