Graduate students would do well to heed Tyler Cowen's career advice. His council definitely helped me during my early years as an assistant professor. You could even call me his protege. But then and now I think his advice tends to be counterproductively negative. His sixth maxim is the worst:
6. If you get careless, sloppy, or downright outrageous referee reports, it is probably your fault. You didn't give the editor or referees enough incentive to care about your piece. So respond to such reports constructively with a plan for self-improvement, don't blame the messenger, even when the messenger stinks. Your piece probably stinks too.
I daresay that most people who took this observation to heart would quit trying. And that's a terrible mistake. Referees are on average a useless lot. If they give you a revise and resubmit, you must kowtow to their idiocyncracies. But if they reject you, your best response is almost always to immediately put your article back in the mail, unchanged. The next referee probably won't like your piece either, but he will have totally different complaints. Indeed, referees frequently contradict each other.
If a journal rejects you, you should only revise your article prior to resubmission if (a) multiple referees share a complaint; (b) if any referee says your article "sounds like it was written by a grad student"; or (c) if you honestly agree with a criticism. Give yourself a one-week "cooling off" period to decide if any of these three conditions hold. If you think not, grit your teeth and throw the dice again.
Tyler's fifth maxim is also off the mark:
5. The returns to quality are higher than you think, and they are rising rapidly. Lower-tier journals and presses are becoming worth less and less. Often it is the author certifying the lower-tier journal, rather than vice versa.
He's right if you're at a top-40 department. But most professors aren't, and never will be. And they can still lead full, fulfilling lives! Everyone should be so lucky. The bottom line is that there are plenty of schools that are more likely to hire and tenure you if you have published something somewhere. Some low-ranked schools basically just count your total number of articles - whence the one-liner that "A dean is someone who can count but not read."
Does this mean that you should, in the words of Francisco d'Anconia, do "work you despise for purchasers you scorn"? Of course not. Write about what interests you, and if you're stubborn enough, you'll probably find a journal to take it. In fact, you're more likely to end up hating your life's work if you work solely on projects with a shot at the top journals.
The rest of Tyler's advice is pure gold. Especially maxim #4:
4. Buy a book of stamps and use it. You would be amazed how many people write pieces but never submit and thus never learn how to publish.
I've often told a student to go straight to his computer, print three copies of his paper, and submit them to a journal. Seldom does he listen. You can't win the bet if you don't throw the dice - and the only way to lose for sure is not to play.