Ken Fisher manages $35 billion in individual and institutional funds and is value-focused. His father wrote a terrific investment book discussed here, but this book is about Ken's investment philosophy, which evolved over his career. This book chronicles that value-focused evolution over his 25 years as a Forbes columnist.
Fisher argues that he cannot predict market tops, so he doesn't try. Instead, he looks for evidence after-the-fact that a top has already been reached. In his experience, bull markets don't end with a bang, they end with a whimper, meaning the market declines slowly, not with a sharp downward spike.
In contrast to his views a couple of years prior, Fisher now becomes bullish on gold. As prices have fallen through the mid 1990s, Fisher believes the gold market has capitulated. Prices are low, and Fisher has his eyes on a low-cost producer that trades at a P/E of 12.
During this time period, there are those who are bearish on the economy in Europe. But monetary policy had become very accommodative, and Fisher argues that this works at stimulating the economy, but with an unpredictable time lag. The newly printed money first flows to financial markets, and only later does the actual economy pick up.
Fisher also gives readers a couple of methods he uses to determine whether a bear market is on the way. Many people think stock buybacks are bullish for stocks, but when buybacks are at high levels for the market, Fisher believes there is too much optimism and this is a bad sign for stocks. Also, Fisher polls his clients on their market optimism, and if they're optimistic (pessimistic) he finds the market does poorly (well).
At the end of 1998, as the tech bubble heats up, Fisher writes that stocks are clearly overvalued, but that he does not see a bear market coming just yet.