Only Three Questions That Still Count

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 money management firm managing tens of billions for individuals and institutions globally. Fisher is ranked #263 on the 2011 Forbes 400 list of richest Americans and #736 on the 2011 Forbes Global Billionaire 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 eight previous books, including bestsellers The Only Three Questions That Count, The Ten Roads to Riches, How to Smell a Rat, Debunkery and Markets Never Forget (But People Do), all published by Wiley. Fisher has been published, interviewed and/or written about in many major American, British and German finance or business periodicals. He has a weekly column in Focus Money, Germany's leading weekly finance and business magazine. Lara Hoffmans is a content manager at Fisher Investments, managing editor of MarketMinder.com, a regular contributor to Forbes.com and coauthor of the bestsellers The Only Three Questions That Count, The Ten Roads to Riches, How to Smell a Rat, Debunkery and Markets Never Forget (But People Do).Jennifer Chou graduated from the University of California with a BS in finance. She was a research analyst of global capital markets and macroeconomics at Fisher Investments.

• Preface ixAcknowledgments xix1 Question One: What Do You Believe That Is Actually False? 1If You Knew It Was Wrong, You Wouldn’t Believe It 1The Mythological Correlation 8Always Look at It Differently 15When You Are Really, Really Wrong 212 Question Two: What Can You Fathom That Others Find Unfathomable? 31Fathoming the Unfathomable 31Ignore the Rock in the Bushes 32Discounting the Media Machine and Advanced Fad Avoidance 33The Shocking Truth About Yield Curves 38What the Yield Curve Is Trying to Tell You 49The Presidential Term Cycle 573 Question Three: What the Heck Is My Brain Doing to Blindside Me Now? 67It’s Not Your Fault—Blame Evolution 67Cracking the Stone Age Code—Pride and Regret 72The Great Humiliator’s Favorite Tricks 85Get Your Head Out of the Cave 874 Capital Markets Technology 95Building and Putting Capital Markets Technology Into Practice 95It’s Good While It Lasts 100Forecast With Accuracy, Not Like a Professional 105Better Living Through Global Benchmarking 1135 When There’s No There, There! 131Johns Hopkins, My Grampa, Life Lessons and Pulling a Gertrude 131In the Center Ring—Oil Versus Stocks 136Sell in May Because the January Effect Will Dampen Your Santa Claus Rally Unless There Is a Witching Effect 1486 No, It’s Just The Opposite 155When You Are Wrong—Really, Really, Really Wrong 155Multiplier Effects and the Heroin-Addicted iPod Borrower 163Let’s Trade This Defi cit for That One 170The New Gold Standard 1757 Shocking But True 185Supply and Demand . . . and That’s It 185Weak Dollar, Strong Dollar—What Does It Matter? 2008 The Great Humiliator and Your Stone Age Brain 213That Predictable Market 213Anatomy of a Bubble 221Some Basic Bear Rules 229What Causes a Bear Market? 2449 Putting It All Together 251Stick With Your Strategy and Stick It to Him 251Four Rules That Count 257Finally! How to Pick Stocks That Only Win 274When the Heck Do You Sell? 281Conclusion: Time to Say Goodbye 289Transformationalism 290Appendix A: Causal Correlations and the Correlation Coefficient 295Appendix B: News You Can’t Use 299Appendix C: Greater Fools 301Appendix D: I Hate Funds 303Appendix E: Annualized Versus Average 307Appendix F: The Wizard of Oz and an OZ of Gold 309Appendix G: 1980 Revisited 313Appendix H: Popular But Problematic 317Appendix I: Covered Calls—Covering What? 321Notes 323About the Authors 329Index 331