Jim Puplova (
http://www.netcastdaily.com/fsnewshour.htm) interviews Ken Fisher in his 2nd hour of December 16 broadcast. I think that listening is worth your time. I have a bias against ubiquitous folks like Fisher (Martha Stewart, Oprah Winfrey etc). But I was quite intrigued by the Fisher interview, and I plan to mend my bias a bit.
His book is "The Three Questions that Count". Here they are:
- What do I believe that is false? [This is a nuance--what do I believe to be right, but is really false. Not what do I believe to be false.]
- What can I fathom that others find unfathomable? [Perhaps just thinking about #1 and #3 satisfies this!]
- What is my brain doing to blind-side me? [Think emotions/biases/herd thinking]
One of the things that he touts are the common investment mythologies, and how they might be wrong. This statement rang very true to me, for I think that the investment community has very much been riveted by lots of mythologies. Now I'm not qualified to comment on those mythologies, but think about everything you've heard this year regarding deficits/savings rates/dollar valuation/yield curve. Fisher had these observations:
- If most folks agree with you do not look at that as confirmation that you are right, but that you might be wrong;
- If you hear/read about investment ideas in the market, they've probably already been priced in;
- The older any argument is, it loses its power (think Y2K); and
- Whatever category of stock that has been hot for the last 5 years may not be hot for the next years. [You've seen that too in how folks pick mutual funds--the last five years have been great, I'll park my money there].
I have more to say, but it was taking me too long to make a lucid post on the matter. That means that I've not thought it through well,and I have undigested ideas. I'll work on these. The Yield curve and the negative savings rate are two items that have my noggin gears grinding.
2 comments:
Ken Fisher may be ubiquitous, but I owe him! I've made money -- good money -- on many of his recommendations (as published in Forbes.)
Fisher published a short article on his Three Questions in Forbes several months ago. I thought the article insightful and looked forward to reading the book. Thanks for posting about it. It reminded me to either hit a bookstore or click on Amazon.
As to Point #4: I recall many years ago Victor Niederhoffer telling a large group that he had someone in his office identify the worst performing mutual fund of the year. (I think it had to be a fund that invested outside the U.S.) This bottom-of-the-barrel item turned out to be an Indian fund that invested strictly in (where else?) India. I think it had had a seriously negative performance that year.
With no other information than that, i.e., that it was the year's worst performing fund, Niederhoffer invested quite a substantial amount of money into the fund.
Within days after making his investment, Neiderhoffer got a phone call from India; it was the fund's manager calling to thank him for his investment and (especially!) for his confidence in him and his fund. I recall Victor telling his audience this story with amused relish. Still laughing you might say.
All the way to the bank, of course.
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