Ken Fisher book review

The Only Three Questions That Still Count: Investing By Knowing What Others Don't

 Ken Fisher is the CEO of Fisher Investments with $30 billion under management. His father, Philip Fisher, is one of the pioneers in the field of growth stock investing. Ken Fisher is one of the permabulls in Wallstreet. Based on stock recommendations in his monthly Forbes columns beginning January, 2001, CXO Advisory Group as of April 28th, 2008 ranks Ken Fisher as tied for the second place with James Oberweis with an accuracy rate of 65%.

The book is about 3 questions that Fisher thinks matter the most in the stock market:

(1) What do you believe that is actually false?

(2) How can I fathom what others find unfathomable?

(3) What the heck is my brain doing to blindside me now?

As John F. Kennedy once remarked: "The great enemy of the truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic."
Fisher shows many examples of market myths and challenges the readers to frame historical data in different perspectives. I highly recommend this book as it reminds readers to be humble to the Great Humiliator (the market).

Another interesting point from this book is that one should be aware of the dilution effect of a particular trading/investing strategy. As crowd adopted a particular strategy (e.g., buy-and-hold strategy), the performance of the strategy will diminish as time progresses. Thus, any published strategies that have yielded great returns and been adopted by a large proportion of market participants will unlikely to yield great returns in the future. One should keep their working strategy in secret until the point where the performance rate is declining. This implies that one should not fall in the laziness of investing/trading but should keep researching and modifying strategies to beat the market.

I like this book although I differ with Fisher on market views. Fisher was still bullish on the market when S&P 500 fell 15% in 2008. Fisher still thinks the low cost money environment will keep the stock market from falling off the cliff. However, we have seen recently that the debt fueled economy started to crumble. Even bond king, Bill Gross, said that the deflationary spiral starts to hit debts because for an extended period of time the U.S. economy confuses debts as assets (I will discuss more about this on Robert Prechter's book). And as the Joker in the Dark Knight said, "When the chips are down, these civilized people, they will eat each other."