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.
One theme Fisher often repeats throughout the book is that US markets often rise in the third and fourth years of the US Presidency. As reader skepticism about this indicator is abound (many readers compare this indicator to the Superbowl indicator in that it may have worked historically, but that there is no cause and effect tying the two), Fisher sets out to defend the cause and effect relationship at work here.
Fisher re-iterates that the current market P/E is useless on its own in predicting the future direction of stock prices. While most experts argue that a low P/E is bullish for stocks, Fisher's research indicates that in reality stocks can go either way whether the P/E is high or low. The reason is that high P/E's are often the case when earnings are temporarily depressed (i.e. in a recession, when writedowns lower earnings temporarily).
As the years 2002 and 2003 were particularly volatile as the US emerged from recession, Fisher spends a lot of time guessing the direction of the market. He was mostly right in his calls, which, as discussed earlier in the book, are mostly based on investor sentiment. When sentiment is positive (negative), this sentiment is built into stock prices, so Fisher goes negative (positive).