Markets Never Forget (But People Do): How Your Memory Is Costing You Money--and Why This Time Isn't Different
In Markets Never Forget But People Do: How Your Memory Is Costing You Money and Why This Time Isn't Different, long-time Forbes columnist, CEO of Fisher Investments, and 4-time New York Times bestselling author Ken Fisher shows how and why investors' memories fail them—and how costly that can be. More important, he shows steps investors can take to begin reducing errors they repeatedly make. The past is never indicative of the future, but history can be one powerful guide in shaping forward looking expectations. Readers can learn how to see the world more clearly—and learn to make fewer errors—by understanding just a bit of investing past.
Chapter 1 The Plain-Old Normal 1
Yes Sir, Sir John 1
The Normal Normal 5
The Jobless Recovery 14
The Always Feared, Rarely Seen Double Dip 23
Chapter 2 Fooled by Averages 31
Bull Markets Are Inherently Above Average 32
Viva the V 36
Normal Returns Are Extreme, Not Average 47
The Pause That Refreshes (and Confuses) 49
Getting Average Returns Is Hard—Really Hard 53
Chapter 3 Volatility Is Normal—and Volatile 57
What the Heck Is Volatility? 58
Volatility Is Volatile 61
The Daily Grind 65
Stocks Are Less Volatile Than Bonds? 67
Economic Volatility—Also Normal 69
Volatility Isn’t Inherently Bad 71
Never a Dull Moment 74
Chapter 4 Secular Bear? (Secular) Bull! 81
Seeing the World Through Bear- Colored Glasses 82
Two Secular Bear Markets? 84
Stocks—Up Vastly More Than Down 90
Chapter 5 Debt and Deficient Thinking 101
Deficits Aren’t Bad, but Surpluses Will Kill You 105
The History of Big Government Debt 110
Just Who Is at Default Here? 116
Chapter 6 Long- Term Love and Other Investing Errors 123
No One Category Is Best for All Time 124
Long- Term Love Is Like Long- Term Forecasting—Both Wrong 129
It’s Still Heat Chasing Even When It Seems Safe 134
Use History to Your Advantage 146
Chapter 7 Poli-Ticking 151
Enter the Ideology- Free Zone 152
Your Party Isn’t Better 153
Presidents and Risk Aversion 155
Perverse Inverse—It’s Four and One 160
Poli- Tics Go Global 170
Poli- Tics Versus Entrepreneurs 172
Chapter 8 It’s (Always Been) a Global World, After All 177
It’s Always Been a Small World 179
Seeing the World Right 186
Lara Hoffmans is a content manager at Fisher Investments, managing editor of MarketMinder.com, a regular contributor to Forbes.com and co-author of the bestsellers, The Only Three Questions That Count, The Ten Roads to Riches, How to Smell a Rat and Debunkery.
Bestselling Author Ken Fisher Releases Eighth Book
Markets Never Forget (But People Do) teaches investors how to make better investing decisions by combating faulty memories
Four-time New York Times bestselling author, 27-year Forbes columnist, and Fisher Investments CEO Ken Fisher released his eighth book, co-authored by Lara Hoffmans: Markets Never Forget (But People Do): How Your Memory Is Costing You Money—and Why This Time Isn't Different (Wiley; November 2011; Hardcover and eBook).
Why do so many investors make the same mistakes repeatedly—being too bullish or too bearish at just the wrong times? Because they forget. "This time it's different," are the four most expensive words in the English language (according to investing legend Sir John Templeton). Yet many stock market investors routinely fall into the trap of thinking "now" is radically different. In Markets Never Forget, Ken Fisher shows readers how their memories play (often costly) tricks on them—and how they can combat their faulty memories with just a bit of history.
This isn't to say history repeats itself perfectly. It doesn't—but a recession is a recession. Some are vastly worse than others—but investors have lived through them before. Credit crises aren't new, nor are bear markets—or bull markets. Geopolitical tension is as old as mankind, as is war and even terrorist attacks. Understanding how investors have reacted to similar past events can help guide investors in shaping better forward-looking expectations. The past never predicts the future, but it can reduce guesswork about what's ahead.
In this book, Ken Fisher takes aim at some major market memory mishaps—like the idea stocks have become inherently more volatile or that wildly above- or below-average returns are abnormal. He shows how, early in every recovery, investors don't believe in it—often at a huge cost. And he shows how, in investing, ideology is deadly. Most important, he teaches how you can use history as one powerful tool to help begin reducing your error rate and help begin getting better investing results.
About The Authors
Ken Fisher is best known for his prestigious "Portfolio Strategy" column in Forbes magazine, where his over 27-year tenure of high-profile calls makes him the fourth longest-running columnist in Forbes's 90-plus year history. He is the founder, Chairman and CEO of Fisher Investments, an independent global money management firm managing tens of billions for individuals and institutions globally. Fisher is ranked #252 on the 2010 Forbes 400 list of richest Americans, and #736 on the 2011 Forbes global billionaires list. In 2010, Investment Advisor magazine named him among the 30 most influential individuals of the last three decades. Fisher has authored numerous professional and scholarly articles, including the award-winning "Cognitive Biases in Market Forecasting." He has also published seven previous books, including New York Times and Wall Street Journal bestsellers, The Only Three Questions That Count, The Ten Roads to Riches, How to Smell a Rat and Debunkery, all published by Wiley. For more information, visit http://www.ken-fisher-investments.com.
Lara Hoffmans is a content manager at Fisher Investments, managing editor of MarketMinder.com, a regular contributor to Forbes.com and co-author of the bestsellers, The Only Three Questions That Count, The Ten Roads to Riches, How to Smell a Rat and Debunkery. For more information, visit http://www.fisher-investments-press.com.
Markets Never Forget (But People Do)
By Ken Fisher
Wiley; November 2011
Available in Hardcover and e-Book
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Markets Never Forget (But People Do): How Your Memory Is Costing You Money--and Why This Time Isn't Different (US $29.95)
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