Author: Aaron AndersonPublisher: John Wiley & Sons
APPARENTLY, the publishing industry rules that determine the claim of authorship can be quirky. How do you explain the fact that Aaron Anderson is identified as writer of The Making of a Market Guru, although it is largely a compilation of investment expert Ken Fisher’s columns published in Forbes magazine between 1984 and last year?
These comments are meant to provide context, highlight certain points, and offer nuggets of information. It’s original material, yes, but it’s less than 20% of the content.
It’s good, though, that Anderson doesn’t overstate his contribution. In the acknowledgement, he wrote: “Frankly, I don’t deserve credit for much in this book. My comments added flavour, not substance. I simply peddled paprika, but Ken cooked the meal.”
Thus, the value of this book lies mostly in the buffet spread that Fisher has assembled over 25 years.
First, the mere idea that the head of Fisher Investments, a California-based money management firm, has been producing 12 to 14 articles per year (except in the debut year, when he started the column in July) for so long, is pretty impressive. It takes discipline, endurance and a keen intellect to keep a column going for a quarter of a century.
And he is acutely aware of his longevity as a columnist. In December 1995, after passing the 11-year mark, Fisher announces his goal of being the magazine’s longest-running columnist.
To achieve that, he has to be still at it come August 2016. “As a man with a deep interest in the history of markets, this matters to me,” he wrote.
He has since made it a personal tradition to write about the guy he surpasses each time he moves up the list of the longest-running Forbes columnists. He now occupies the No. 4 spot.
The title of his column, Portfolio Strategy, tells you something about what he usually writes about.
Fisher’s columns are highly stock-centric, and he makes no apologies for that: “I’m a stock market guy. Always have been, always will be.”
So be prepared for plenty of references to bulls and bears throughout the book. Also, he focuses almost exclusively on the United States.
Essentially, he dispenses investment advice, chiefly by recommending stocks, predicting where the market is heading, and telling readers what to look for when choosing winners and avoiding losers.
The stock picks form an important yardstick of the usefulness of Fisher’s work for Forbes. This is why since 1997, the magazine has been issuing report cards on its columnists, tracking their stock picks versus the S&P 500 index.
In this respect, Fisher has done well up to 2009. The average annual return on his picks was 9.9%, while the index gave 4.7%.
At the same time, Fisher often looks back at his forecasts and selections, showing no qualms about admitting it when he has been wrong. “My overall Forbes record is good but certainly not perfect. I make bad picks. I’ll make others. I hope each time to learn from my mistakes,” he says in a January 1994 article.
However, most of his stock picks have been omitted from this compilation to save space, and of course, because they are outdated.
Also, to most readers outside the United States, his buy calls are irrelevant most of the time.
As such, we can judge the book not so much on how well he can make money in the market, but on the strength of the knowledge, wisdom and views that he shares through his columns.
After all, you don’t sustain a column for 25 years by being a shrinking violet. It’s always interesting to see somebody sticking his neck out regularly. It doesn’t really matter how often he’s right; it’s his courage of conviction that’s compelling.
Apart from writing about the stock market and individual stocks, Fisher’s main themes on investment include championing the use of PSRs (price/sales ratios) over P/Es (price-to-earnings ratios) to identify undervalued companies; advocating reading and research as investing must-dos; his preference for small-cap stocks, especially in the early years of his column; his criticism of auditors and accounting practices; and his distaste for some other forms of investments (such as mutual funds and annuities).
The last theme stems from Fisher’s contention that funds are expensive, and that investors should instead buy individual stocks.
He first talked about this in the August 2001 instalment of Portfolio Strategy. “The average Forbes subscriber (net worth at last count, US$2.1mil) is too wealthy for funds,” he argues.
“Funds were never meant for you. They were meant for folks with a small pool of money in search of diversification. But at a price. A big one.”
The piece came with a provocative title: “I Hate Funds.” Over four years later, in a January 2006 article, Fisher revisits the topic.
He begins by pointing out that the earlier column was “an unemotional look at (the mutual funds’) pros and cons”, but it was the heading that angered the fund industry. “At some risk that an editor will attach another sensationalist headline to my ideas, I am going to venture into this territory again.”
This is the title for his second column on mutual funds: “I Still Hate Funds.” The column never strays from the investment path.
When his father – Phillip Fisher, also a well-known stock pundit – died in March 2004, the younger Fisher pays tribute a month later with an article that imagines Phillip’s thoughts on investment if he were alive then. This is clearly a book for serious investors.
The Making of a Market Guru is fascinating as a study of how the investment philosophy and approach of an established fund manager has evolved over the years.
But if you’re looking for cohesive and concentrated (and also more entertaining) volumes on investment by Fisher, his others books are better choices.
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