Exclusive Interview with Ken Fisher Part 8 - Best Industries and Countries

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as GOL Intelligent Airlines (GOL), FLSmidth (FLIDY), and Hasbro (HAS). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 8
Please note: The original interview took place on Wednesday, October 27, 2010

Stockerblog: What sectors and industries look good to you?

Fisher: I'm still in the exact same place I've been in for quite a while. We're in a period of where, domestically and globally, the economy will do better than people think it will do, when they don't think it will do well, and therefore in an environment like that, the stock area that will do well are materials, industrials, the more capital intensive parts of technology, consumer durables but not consumer staples, and to a lesser extent, energy.

The parts that do worse tend to be consumer staples, health care, utilities, finance, all the things that aren't economically sensitive.

Another way of saying it is that things that are rising right now are things that are economically sensitive. Because most people think that the economy is not doing so well. For example, something that's perfectly observable that nobody wants to write is that nominal GDP in America is already at an all time high. It's a simple fact, but nobody wants to write that, and if you write it, nobody will believe it. Because the mythology around us in the media is that we're mired in a slump. 'It's a dismal world.'

That's real GDP that's at an all-time high, inflation adjusted GDP isn't quite to its all time highs yet but it will happen in the first quarter. It's not that far away. It's been expanding for 14 months now. When the NBER came out and said 'we're officially saying the recession is over and it ended in the third quarter of last year', the media reacted to that with catcalls.

The fact is, the economy on a global basis, with some places better than average and some places worse than average which is normal, the economy's been expanding globally earlier than that.


Stockerblog: What countries do you think look good right now?


Fisher: Overall, the next step is you want to be overweighted in emerging markets, you want to be lightly overweight to America, and you want to be lightly underweight to the English-speaking world and most of Europe. We continue to have a world where people are skeptical of emerging markets, but emerging markets continue to do better than people think they will, with a couple of exceptions, and one of them is China. China continues to do well economically but there is so much interest in China relative to the rest of the emerging markets that the Chinese markets don't do well, because there is too much optimism and expectation about them and excitement. Latin America, Brazil, Chile, obviously not Venezuela, the broad spectrum of Hispanic America, the broad spectrum of the rest of Asia, India, and Eastern Europe. America is slightly over-weighted because America is doing better than people think it is.

End of Part 8

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

Part 4 of this interview is available HERE.

Part 5 of this interview is available HERE.

Part 6 of this interview is available HERE.

Part 7 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the articles were written.

Copyright 2010-2011. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 7 - Can Traders Make Money

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as Sims Metal Management (SMS), Net Servicos de Comunicacao (NETC), and PetroChina (PTR). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 7
Please note: The complete interview took place on Wednesday, October 27, 2010

Stockerblog: There was an article recently about how some investors got early retirement, they had nothing better to do, did a lot of research on their stocks, and were very successful. The article talked about one guy who built his portfolio from $30,000 to $3,000,000. Do you think that article was about an aberration or just looking at one end of the bell curve?


Fisher: That's looking at the very few people who are definitely one tip of the bell curve.

And it's not the average investor that could possibly consider it unless they had an extreme amount of luck to achieve anywhere near that.

The average investor by definition cannot do that. The average investor cannot possibly beat the market. The average investor, at most, can equal the market.


Stockerblog: Speaking of playing the market, the Bunk chapter on swine flu and some of the other things. It seems like someone who trades or does short term investing could actually play the opposite of some of these bunks. The swine flu could be an example or some other major catastrophe where the market has a temporary sell-off, and if you are mentally set to go into the market to do the opposite, a trader could actually do fairly well playing to opposite of the common bunks. Would you agree with that?


Fisher: I think that's possible but for the average person that thinks it’s a trade, that he or she is a trader, is exceptionally unlikely. In fact, when we look at the history of traders, most of them don't do very well.

Said another way, if you say who are the traders we can think of that have become legendary investors, are really, really rich and successful as traders, there aren't very many of them; although we have a lot of traders in total, which tells you that it's another one of those things where it’s a tip of the bell curve where people have a knack to do that but they're very unusual and they are probably least like our primitive stone age ancestors. They probably have the leave behavioral finance issues embedded into their brains for some reason.

But there aren't very many of those people and the odds of anyone being one of those people is small.

If the person that can trade these things, which I do believe there are people who can do it but its not me that's for sure, if there are people good enough to trade these, they are good enough to trade all kinds of other things.

So another one of the bunks that you will remember reading about is my comments about gold, and gold is basically a thing where if you're a very good trader, gold might be a good thing for you but gold has had an OK return but a huge volatility over time, and 85% of history on a monthly basis has lost money, and made all its total return out of 15% of the months. If you're a good enough trader, you should be able to trade gold successfully and you should be able to trade all kins of other things too. And you don't need an trading advice from me, that's for darn sure.

The fundamental nature of those rare George Soros like traders or Paul Tudor Jones type people, the people at have made money off of trading that have gotten good returns and have had some consistency, because you can trade gold, you can trade oil, you can probably trade swine flu, but most people aren't very good traders.

End of Part 7

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

Part 4 of this interview is available HERE.

Part 5 of this interview is available HERE.

Part 6 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the articles were written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 6 - How Tax Changes Will Affect the Market

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as Sims Metal Management (SMS), Net Servicos de Comunicacao (NETC), and PetroChina (PTR). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 6
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: In regards to Congress, in your book, you do show the analysis of a change in parties and how it can affect the market, but have you done research on Congressional changes from one party to another?


Fisher: Those don't matter much. What matters is do they have power to pass or not.

It's really not whether the Republicans are better or the Democrats are better. When you move from one party has got the power to nobody's got the power, the market likes it better.

Let me put it this way. Markets really don't like political change. They don't like having legislation. It doesn't matter if it's legislation that the Democrats would prefer or legislation that the Republicans would prefer.

So if you take the time period like the 1994 midterms with the Republican revolution, that worked really well because the Republicans didn't have big margins when they won, in 1994. They had a big election to get there but they didn't have big margins, and then they had a Democratic president who could veto. So not much got done after that.

This time we'll have the same thing. Almost certainly, the Republicans will take the House of Representatives. (ed. note: interview took place Oct. 27) The Democrats won't have any margin and won't be able to pass anything, and the Republicans will pick up steam, and while its very unlikely they will take control of the Senate, with one House in one party and another house in another party, it's like what Ronald Reagan had in 1983.


Stockerblog: Now Bunk Number 36, I think most investors, obviously incorrectly, fear higher taxes. This is the one about stocks love lower taxes.


Fisher: We kind of talked about this before. Those fears are already priced into the markets.

This can be done one of two ways. The one people are worried about now is the sun-setting of the so-called Bush tax cuts. Everybody knows that's fair and have had a lot of time to react to it.

Let's step back for a minute. The United States is part of the world is important, but it's not the only part of the world, and of the United States, more money than not isn't taxable than is. Most of the money that's taxable doesn't get sold anyway, like Bill Gates owning shares in Microsoft or me owning Fisher Investments. It's not like a stock that you're going to turn around and sell right away. And then the people that are taxable investors, if you think about it now after what we've been through in the last few years, not that many of them have a lot of capital gains to take. If they wanted to take them and realize the gains, they have had all this time to do it before the tax change occurs. So it's not like they didn't have lots of lead time.

So you can say, who in their right mind if they've got a thousand shares of stock X at a big capital gain, and they want the lower rate, who in their right mind is holding off until after the change. The selling's all done in the here and now. The odds are that the market doesn't have a problem with that moving forward.

There's this part that I find amazing, which is the arrogance of presuming that an investor sees something that pretty much every other investor ought to be able to see, and from that, you continue to see that it’s a smart economic decision. That might be true outside of the world's capital markets but the whole role of capital markets makes that impossible.

End of Part 6

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

Part 4 of this interview is available HERE.

Part 5 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the articles were written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 5 - Where the Market is Going after the Election

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as TransCanada (TRP), Repsol (REP), and Sanofi-Aventis (SNY). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 5
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: Bunk number 40 actually surprised me. This is the one about 'Presidential term cycles are voodoo.' I would have thought that this would have been a typical bunk that wouldn't really have patterns.


Fisher: You think it would be something like the Super Bowl indicator?


Stockerblog: Yes. That's what I would have thought and I think a lot of readers would have thought so.


Fisher: I think most people's reaction is that's what it is. Most people's reaction is something like what you articulated, and I'm just going to make a series of points. One of the points which is actually in here which is coming right at us, not only are the data on page 154 and 175 about the third year president's term true, but the history of twelve months after a mid-term election is positive, not just the year but down to the six months. All are positive, some more positive, some less positive.

I believe what happens based on my analysis of political processes is, I spent a lot of time analyzing this and I think I know what I'm doing, is that the president that I've described in this pushes his most onerous legislation in the first and second year of his term because he knows that his party almost always, this is relative power of the opposition in the mid-term which is exactly what's going to happen six days from now [ed. note: interview was Oct. 27], and he knows he won't be able to do later, so he does and the more he does it, the more his party loses power to the opposition party in the mid-term.

This is a pattern that we do over and over again that we never seem to fully recognize. There are very few exceptions to it in history and presidents feel lucky when they get those exceptions. In the first two years when we do all that heavy legislation, the people don't recognize this because of the way liberals and conservatives think is similar is just opposite. They think that whatever he passed that they want to do is what's right, but what they miss is anything you legislate, other than platitude statements, is taking from somebody to give to somebody else in some way, One of the lessons of behavioral finance is that the average American hates a loss two and a half times as the love a gain, so when you take from these to give to those, the people you take from hate it more than the people you give to like it, and everybody else fears you are going to come and get them next.

So when we do that politically, which is in the first and second year of presidents' terms, the process of what could be referred to a political risk aversion rises, and when political risk aversion rise, total risk aversion rises, and you get more market-bad times. On the other hand, between about June of the second year of the president's term and September of the third year of the presidents term, political risk aversion in America in a predictable way goes from an all time highest level in the four year cycle to its all time lowest lever in the four year cycle. As that political risk aversion falls to the floor, total risk aversion has a tendency to fall.

So if you take this year, the one flavor where you have a Democratic President and Congress, you saw legislation that you know about. You had all kinds of people that didn't like that squealing like stuffed pigs, how terrible it is, how the world's going to hell, how Obama is a socialist, and, and, and, and, and. From their viewpoint, that all makes sense. But they don't fully appreciate that that stuff ended. It's over. When I say it's over, were going to have effectively the equivalent of a hung parliament. The only things they are going to pass after this election are things that have very broad agreement, and there's not that much of that. So the takes from these to those is completely over.

Therefore, political risk aversion is over, and when political risk aversion falls, total risk aversion falls, the market's going to do better than not. That's what's behind that cycle. The key, as I said in my The Only Three Questions book, to recognizing a pattern is a bunk like the Super Bowl indicator or whether it's something real is to actually come up with an underlying economic mechanism that drives something that relates to either the economy or markets.

In this case, it's simply, presidents are really good at elective politics, that's how you become president. If you are not good at elective politics, you don't become president, and they know what happens with mid-term elections. When President Obama got elected, he know that he had two years to get things to Congress so if he couldn't get them through in the first two years, he's never going to get them through in the back two years, so he rammed a lot of stuff through and he did that rather successfully. He got a lot of stuff through but not a much as he wanted to, but he still got a lot of stuff through, and made a lot of people hate it, made a lot of people upset, and increased political risk aversion. But now that's going away.

We did predict last year, that basically we would get the election outcome approximately that we are going to get next week, which is a Congress that can't do anything. I'm always amazed that because so many people are so interested in politics, they don't seem to be able to see the forest from the trees.

End of Part 5

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

Part 4 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the articles were written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 4 - Behavior Finance

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as TransCanada (TRP), Repsol (REP), and Sanofi-Aventis (SNY). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 4
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: You discuss in your new book the new term, or relatively new term, 'behavior finance,' and how the brain works. Can you just describe what behavior finance is and how it applies to investing?


Fisher: Effectively, are brains are hardwired to engage in certain activities that are based on evolution. The people that exist today are descendants of those who were successful in that environment, and the people who weren't successful in that environment didn't have descendants. We have are brains programmed to deal with certain kinds of things, but capital markets are very different compared to those types of things, and are brains aren't really set up to deal with that. So there are all kinds of things we do naturally that work really well in either or both of the hunter / gatherer world or more primitive agricultural world, but don't relate to capital markets.

So for example, a standard feature, if you are out in the woods by a campfire, and you hear a loud noise, you turn and focus on the noise. But the way capital markets work, when you turn and focus on something, something hits you in the back of the head. The best procedure when you hear a loud noise in capital markets is to turn around and look away from it and see what's coming at you, because the thing that's coming at you is always a negative activity. That's counter-intuitive to the way our minds work.

The brain has standard features that I talk about including confirmation bias, which is terribly basic to human tendency. You see evidence of things that confirm our prior biases, while not seeing or trying not to see the branching off things that contradict our prior biases. In that prior world that we evolved from, this was terribly important because it reinforced our propensity to keep trying. One of the things that's unique about humans as animals, is our 'trying' function relative to what other animals do. We are tryers, tryers from the get-go. That's partly because confirmation bias makes us see the evidence of things that confirm our prior biases and contradict the ones that don't.

So when we have a mistake, we look at our mistake and think it is bad luck, and we keep going. The effect of that is it feeds ironically into the propensity to hang onto myths. Once a cultural myth evolves, that fit our prior bias, we look for evidence that confirms it and deny evidence that denies it and we keep hanging on to it. The whole book Debunkery has a foundation of confirmation bias under it.

There are all kings of other tendencies people have that are out of behavioral finance, that in the last thirty years, behavioral finance has uncovered, which is the tendency to move and react to new things and stimulus and forgot about longer term things. Anything that happens recently you think of as massively more important than anything that happened five or ten years ago, even though they all happened in the past.

So for example, this is the tendency that you see in investors right here who are trying to fight the last war, even though almost always the last war has come back or something else comes back to you again. In fact, the nature of markets is that when everybody tries to fight the last war, it's not 100% true but it pretty much guarantees that the last war will come back on you. But with every darn cycle, people keep looking backward. It's just natural. So behavioral finance is really just this process that looks through 'where do our brains blindside us,' and how are we not set up, tied to where are brains were wired for a different purpose once upon a time, and how are brains are not set up to deal with capital markets.

End of Part 4

Part five will cover Fisher's opinion pf presidential and congressional term cycles on the stock market. Stay tuned.

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 3 - Con Artists, Madoff, Rats

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recmmended several income stocks, such as TransCanada (TRP), Repsol (REP), and Sanofi-Aventis (SNY). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 3
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: Let's talk about Bunk number 11, A Good Con Artist is Hard to Spot. As a follow-up to your How to Smell a Rat book from last year, do you think things have change in terms of the government taking a look at possible rats, or individual investors being more alert and aware, or do you think nothing has really changed?


Fisher: I think there's been a little bit of change on the part of the government but only a little bit, and let me address that. First, while my book How to Smell a Rat made the best sellers list, for the most part in today's world, book sales are down anyway. You can make the New York Times best sellers list if your book sells 35,000 copies in the first year, which isn't that much. My Only Three Questions book had to sell 125,000 copies in 2007 to do that. Today you can do it for about 35,000 copies. So that tells you 35,000 people bought the book, probably half of them never even opened it, and gave it to somebody as a gift or whatever, and people got it as a gift, and so on. So my point is not that many people as a percent of the investor world actually gets past the basic methodology.

There's this notion that nobody could have figured out Bernard Madoff was Bernard Madoff. Bernard Madoff, as I wrote about it in the book, had ALL the classic signs of the con artist, every single one, straight on down the list, and the most telling about that was that he took custody. Now what the SEC is starting to do, which is very good in the aftermath of Madoff and as I prescribed in that book, not that they listen to me, they understand this, the SEC has accelerated their inspections of those who take custody and put more emphasis on them and less emphasis on those that don't take custody, because they understand that this kind of thing happens 100% of the time where somebody's taking custody. So if you are looking for Bernard Madoff's, you look among the realm of those that take custody.

The dilemma unfortunately, is that you've got a lot of people that operate in realms that don't require an SEC registration, and unless somebody complains about them, they're not going to see them, smaller hedge funds and what have you. I think Bernard Madoffs will be harder to do at that size. If Madoff hadn't existed, Stanford would have been the biggest one in history. Both of these were lots and lots of much smaller ones, and that world is still out there. That world, that I wrote about in How to Smell a Rat, every time you have a bear market, Ponzi scheme operators get uncovered. It's kind of the Warren Buffett line that "you don't know who's swimming naked until the tide goes out."

Whenever you have a bear market and sentiment falls drastically, Ponzi scheme operators that are dependent on raising new money from optimistic people to pay off redemptions, which is the game of the Ponzi operator, they can't do it so they get uncovered for the first time. And guys that have successfully Ponzi schemed through a whole market, they get uncovered in a bear market and the consequences of a bear market. So the big ones for this cycle have been done. But that doesn't mean there aren't people out that are still doing it. There will be and the next cycle around there will be another raid.

Unfortunately, I don't believe that this stuff ever goes away. It's a little like the notion of mildew in a moist environment; you may clean it off here and clean it off there but once you wait, it just comes back. Or maybe Neil Young's line in a song he did a long time ago that "rust never sleeps."

End of Part 3

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 2 - Elections, California's Future

Ken Fisher is a money manager, Forbes columnist, and on the list of the Forbes 400 Richest Americans. His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 2
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: I'm going to get back to the bunks shortly but I read recently that you're moving your offices or some of your offices to the State of Washington?

Fisher: We have 325 people in the state of Washington., and we started moving people into Washington three years ago. We're building a building in Washington because traditionally we like to own our own real estate and not to be in leased space. At this point in time, we now have about a third of our employees in Washington and we are not doing anything that I consider as very radical.


Stockerblog: What this was leading to was, I was wondering what you think is the future of California, not from a political standpoint but a financial standpoint in the next couple years.


Fisher: In the next couple years, California will largely continue on the trend that is has been on. Let's just think that through. Forgetting about other things, the driving feature in California for some period of time now, forgetting about budgets per se, has been to slightly lose population While shifting the demographic of the citizenry and the voter base, away from productives towards non-productives.

That becomes a momentum unto itself because the productives move out of the state of California and the non-productives into California, the non-productive become dependant, if you will, on the professional political class, which provides more support for more big government which requires more spending which requires more taxes and/or bigger deficits., either way, which again drives more productives away. Until you break that cycle, which is not easy to do, and if not done quickly, California continues down the same basic path.

So if you look at this year, which is on a national basis, is a year that is aiming towards more fiscal responsibility, supposedly, or more conservative people being elected, House of Representatives almost certainly going to Congress, governorships shifting heavily away from Democrats towards Republicans, California isn't going there at all. California is going to elect or in a sense you could say re-elect Jerry Brown governor. [Ed. note: Interview was Oct. 27] The legislature is going to remain heavily Democratic. The same dilemmas that Arnold Schwarzenegger faced as governor Jerry Brown is going to face as governor.

If you look for example at it from a different way and this is somewhat telling, if you look at the House races across the country that are thought of as toss-up races, the ones that could go either way, not a one of them is in California.

California isn't shifting so its basic problems will remain the same. Its socio-political world has continued to tilt away from productives a little bit each year toward more unproductives a little bit each year, which maintains and establishes the voting populace at a little more dependant on the professional political platform.


Stockerblog: I think the fear from investors is, could the state go bankrupt, is that even a possibility, and if that did happen, then what?


Fisher: You asked about the next few years. The state is not going to go bankrupt in the next few years. The state's going to have severe budget problems in the next few years. Might the state eventually go bankrupt? Yea, but not in the next few years.

I will make one point, that's an observation that so far does not seem to get the light of day. In November, I turn sixty, and in my lifetime, my adult lifetime, there has never been a November election in California that did not have multiple bond issue initiatives on the ballot. For the first time in my adult life, there are no bond issues on the California ballot and nobody seems to notice that. The San Francisco Comical hasn't written about it, the LA Slimes hasn't written about it. That's an interesting sign. It's a sign to me that California isn't going bankrupt anytime soon, but that's also a sign that's good that they can't sell any bond issues anyway.


End of Part 2

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns are available in the form of a free Excel list at WallStreetNewsNetwork.com.

Part 1 of this interview is available HERE.

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

Exclusive Interview with Ken Fisher Part 1 - Debunking, Sleeping Well, Taxes

Ken Fisher is a money manager, Forbes columnist, and on the list of the Forbes 400 Richest Americans. His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 1
Please note: Interview took place on Wednesday, October 27, 2010

Stockerblog: I'd like to first ask you about your new book Debunkery. Why don't we start out with you giving a description of what debunkery is and how you came up with the name?

Fisher: The name popped into my head. Debunkery is the process of what I talked about in my first question of The Only Three Questions That Count book, which is 'What Do You Believe that is Actually False'. In Debunkery, the game, if you will, is to take things that are widely accepted and see if you can subject them to some catechism that shows that they are not true. That which is thought of as conventional wisdom is exposed as actually false, and therefore bunk, and therefore the process of debunking or debunkery.

Debunkery is a game that I try to convey in the book by using some techniques that aren't necessarily terribly complicated, some of which are easier to learn than others but pretty much anyone can learn if they wanted. So part of it is not just showing the 50 things that people often believe that are bunk, but teaching them how to do the debunking themselves so that when they finish reading the book, they can do their own debunking.

Stockerblog: Let's talk about Bunk #2 which is 'Well Rested Investors are Better Investors.' Now I think what you mean by that is the classic conservative type of investments like bonds or bank accounts, that type of thing, is not really the way to go; you really have to go into stocks to get the returns you are really looking for.

Fisher: Well you can view it that way, and that is one way to view it, but you see a lot of people on different web sites saying that you need a sleep-at-night factor, or sell down to the sleeping point; you hear all these things about sleeping and conventional wisdom. Or people say things like, "Well I've gotten out of the market and I'm not going to get back in until I'm more comfortable with things," "I don't think I could sleep if I owned category X now." And the fact is, capital markets, in all their aspects, are ones where comfort is a very expensive item.

If you are prone to be comfortable based on what you own, you better reconcile yourself to low or negative returns. Most of the time when people buy the things that are most comfortable, they actually end up getting negative returns. The history of buying comfort is very expensive.

So if you think of any asset class, doesn't matter whether it is stocks, bonds, commodities, anything, the time people are most comfortable with it is mostly really close to the peak. When people think they have the clearest future, it's close to the peak. When they think they can't see a clear future out there at all, that's more often, close to a bottom.

Stockerblog: I know that some investors feel comfortable with municipal bonds, they are looking at possible increases in capital gains taxes, they are wondering, well if I can get 5% tax free versus nine or ten percent on my stock portfolio, which is going to be taxed at the state and Federal level, maybe that's what I should be in.

Fisher: One of the things that they don't think through in the way capital markets work is it's not about whether you're rational, and it's not about whether your smarter or more rational than the guy down the road, the reality is capital markets discount that which everyone has been digesting for some time, and it's virtually impossible to think that a concept such as the ones you just articulated isn't exceptionally, widely digested by a very large number of people, who processed it and pressed it into securities at current prices.

So for someone to think, "I can get a better return off of something like that," whatever it is, it's very hard for people to get but it's an arrogant statement. It's saying my rational observation is somehow unique compared to all the other people confronted with the exact same phenomenon.

That's one of the hardest concepts that people have is that markets are discounters of all known information. And while markets are not perfectly efficient, they are relatively efficient. So something as simple as taxes, millions of people have forever made decisions based on tax rate changes, and there is actually a very clear and demonstrable history which people don't want to hear about, which is tax rate changes don't end up having facts that people would predict because they are priced into the market long before those tax changes ever come to pass.

Stockerblog: I remember that was in one of your bunk chapters.

Fisher: One of the things you hear people say all the time are things like "Stocks will do well or badly, bonds will do well or badly," you pick a category, it doesn't matter to me, "because capital gains rates are going up or down, or because income tax rates are going up or down." They somehow seem to forget that, and this is one of the points I use in Debunkery, is that history is actually very useful for debunking, because we've had a lot of times in the past where interest rates have gone up and own, and tax rates have gone up and down, and so if something as simple as that were to have the effect that people think it might, they would see those changes when those simple changes occurred in the past, and that's easy to demonstrate.

I tell people all the time, stop and go back and check things. And very few people do, because what most people do is they go into simple observation of the way they think it out to work and they don't go any further than that. This is Bunk #7, which is Go With Your Gut. Your intuitive reaction to things, again everybody else's reactions which are not that different than yours, unless you think you are really unique which is a really arrogant statement, they are already priced into the market already.

End of Part 1

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns are available in the form of a free Excel list at WallStreetNewsNetwork.com.

If you missed last years interview, you can check it out as follows: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6

By Fred Fuld at Stockerblog.com

Disclosure: Interviewer doesn't own any of the stocks mentioned above at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of Stockerblog.com or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.