Three Things I Learned From Billionaire Ken Fisher

by Mark Skousen

Three Things I Learned From Billionaire Ken Fisher

by Dr. Mark Skousen, Contributing Editor

Thursday, March 3, 2011: Issue #1461

Ken Fisher is a relatively new member of the prestigious Forbes 400 Richest People in America list, having been "inducted" in 2005.

He's achieved this acme of financial success by adroitly marketing his managed accounts, Fisher Investments, to some of the biggest names in the world. With over $43 billion under management, his clients include Merck (NYSE: MRK), H.J. Heinz (NYSE: HNZ), Volvo (PINK: VOLVY) and Del Monte.

He learned about the world of investing from his father - a money manager who wrote one of my favorite investment books, the classic Common Stocks and Uncommon Profits.

Fisher gave the keynote address at FreedomFest's World Economic Summit in the Bahamas over the weekend - and attendees got their money's worth...

What Ken Fisher Says About the Recession and National Debt

Calling himself a "California wing-nut" who thinks outside the box, Fisher seemed to relish provoking his audience of well-heeled investors and libertarians.

Fisher attacked the gold bugs and doomsdayers in the audience by issuing a series of blunt statements:

  • On the Recession: Fisher declared that the Great Recession is over, noting that: "Real world GDP is at all-time high in 2011."
  • On the National Debt: "The national debt in the United States is not a problem. Interest on the debt is only half of what it was 20 years ago as a percentage of GDP and it would take a 200 hundred basis point increase to get interest costs up to the same percent."

Ken Fisher's Views on the U.S. Dollar, Stock Market and Gold

And as for the U.S. dollar collapse that some pundits have predicted? Forget about it, says Fisher...

  • The U.S. Dollar: He expects the dollar to strengthen this year, due to Federal Reserve tightening and Middle East turmoil. But 2012, an election year, could be different, as Bernanke is a "misguided" political animal.
  • The Stock Market: Fisher despises Bush, Obama and all politicians, but that doesn't keep him from noting this objective fact: Stocks tend to do better under Democrats than Republicans. For example, the first year of a Democratic president has been historically "overwhelmingly positive" and the first year of a Republican president has been traditionally "overwhelmingly negative." President Obama, like most Democratic presidents, has been good for the market.

But according to Fisher, "Ideology is for idiots." He confessed that he's given up on politics (he used to raise money for the Republican Party in California). "I'm a market guy, not an ideologue."

  • Gold: The odds are stacked against the gold bugs. Fisher referred to a long-term study, which compares gold and stocks: "85% of the time, gold goes down in price; only 15% of the time does gold go up. On the other hand, 67% of the time stocks go up; only 33% of the time do stocks go down." Thus, Fisher says short-term traders have a much better chance of making money in stocks than gold. "I've never met anyone who could trade gold successfully," he said.

Fisher didn't give any stock tips, or discuss his track record, although Fisher Investments has beat the market 11 out of the past 14 years, according to Forbes. And his best strategy for winning on Wall Street this year?

Be Selective and Go Short-Term

Simply put, be a stock picker, rather than buying the indexes or commodities, all of which have risen so high that well-selected individual securities have a better chance of beating the market: "Short-term trading offers the best opportunities today," he told the audience, although he admitted he's personally not suited to short-term trading.

I asked him, "What would you put in a safe deposit box that you plan to give to your children and heirs - a long-term investment you wouldn't touch during your lifetime. Would it be stock certificates, gold, diamonds, or cash?"

His answer shocked the audience: "Just a simple note saying, 'I love you.'"

When I suggested his heirs (three sons and several grandchildren) would probably be disappointed, he explained: "I wasn't born rich, I don't live rich, and I don't expect my children or grandchildren to live off my fortune. Making my offspring rich is bad for them." He said his estate (currently worth $1.6 billion) is largely going to Johns Hopkins for medical research.

Finally, I asked, "What's the greatest lesson you have learned in life?" He quickly quipped, "Pay more attention to my wife." He then talked more philosophically about the hardest question to answer in life: "What do you believe that's false? People don't like to go there."

From his wallet, he pulled the poem "If" by Rudyard Kipling that his father, Phil Fisher, read to him when he was a child. "These are words to live by." Amen.

Good trading,

Dr. Mark Skousen

P. S. The Washington Post calls it "The greatest libertarian show on earth." Alex Green says, "Next to my marriage and the birth of my children, I wouldn't miss it for the world." And Steve Forbes says, "So good I changed my schedule to attend all 3 days." What is it? FreedomFest.

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