by Scott Ronalds

Report on Business Magazine recently released their 7th annual Invest Like a Legend guide. The piece profiles 10 “investing legends” who each reveal their strategies for how to make money in the coming year. It’s a fun read, full of big personalities and bold predictions. But it should come with a warning: READ AT YOUR OWN RISK.

Here’s a brief synopsis of what some of the experts are saying:

  • Jim Rogers (co-founder of the once-famous Quantum Fund) suggests putting your money into agriculture and shorting U.S. high yield bonds.
  • Marilyn Cohen (a well-known bond manager and author) likes airline bonds but suggests fixed income investors shorten their bond durations.
  • Richard Bernstein (a former Merrill Lynch strategist) is keen on energy stocks and is avoiding Japan.
  • Jeffrey Gundlach (“the reigning bond king on Wall Street”) likes the financials, materials and industrials sectors, and thinks there’s a good chance we could see 6% bond yields (for 10-year U.S. Treasuries) in 4-5 years.
  • Suze Orman (the personal finance guru) has 90% of her portfolio in U.S. municipal bonds and is starting to invest directly in gold mines.

These professional investors have made millions (billions in some cases), so it’s enticing to emulate what they’re doing. But, ironically, herein lies the biggest source of lost returns for most investors: focusing on the short term and bouncing from one strategy to another.

The above list represents a mixed bag of investment ideas. We’re being sold on the prospects of everything from gold mines to agricultural land to airline bonds, and are being told it might be a good idea to short junk bonds and Japan. If you’re drawn to these ideas and want to incorporate them into your portfolio, it likely means a pivot from your plan.

As investors, our behaviour, i.e. when and how often we buy and sell, has by far the biggest impact on our returns over time – see our breakdown of the costs of investing. Stories that encourage us to veer from our plan, abandon an approach or jump on a new strategy do more harm than good. Not to mention the fact that NOBODY knows what will happen in the markets over the next year.

Consider that this is ROB’s seventh annual list. The six before it had investors and recommendations just as interesting and different as this year’s. The point being, there’s always an exciting new strategy or idea from a smart-sounding “expert”. There’s nothing wrong with riding on the back of a talented investor, but you need to be willing to sit tight and stay the course – and read about the next hot opportunity at your own risk.