Saturday, October 16, 2010

The Making Of A Market Guru: 2008 - 2009

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.

Ken's early comments of 2008 continue to expound his bullish stance. He argued that there is no credit crunch, because even though small firms may not be increasing debt levels and buying back shares, large companies are still making such announcements. He believed the stock market correction (at this point, it was still just a "correction") was offering investors an opportunity to buy large caps at great prices.

As the year dragged on and market losses started to increase, Fisher admitted that he had erred. Nevertheless, he remained bullish, arguing that pessimism is so strong (using a few examples of how bad news is emphasized while good news is ignored) that the market is unlikely to sustain or increase its losses.

As the market sustained and increased its losses, Fisher made the argument that lower prices make stocks less risky, not more risky (as is commonly believed). He continued to advocate that readers jump into stocks at fire-sale prices, as sharply falling markets tend to be followed by equally sharply rising markets.

Finally, the market started to rebound big in 2009, and Fisher argued that this trend is likely to continue as the global economy recovers. In his final column in the book (December 2009), Fisher remains optimistic for both stocks and the economic recovery.

1 comment:

Unknown said...

A terrific book. What amazed me (I bought it after your first few reviews) was how consistent he was on the big calls. To your point he missed 2008, but that didnt' stop him from nailing 2009. Terrific book, terrific performance from someone worth listening to.