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- Herausgeber: John Wiley & Sons
- Kategorie: Ratgeber
- Serie: Little Books. Big Profits
- Sprache: Englisch
Boost your investment returns by dodging the most common investing mistakes
In the newly updated second edition of The Little Book of Market Myths: How to Profit by Avoiding the Mistakes Everyone Else Makes, celebrated investor and Fisher Investments' founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher insightfully explores many common myths costing investors dearly. Fisher provides a comprehensive guide to navigating the investment landscape more wisely, debunking widespread myths that lead to costly mistakes.
This edition delves deep into the frequent missteps made by both retail and professional investors, demonstrating how a better understanding and avoidance of these pitfalls can lead to improved long-term and short-term financial gains. Fisher critically examines why popular beliefs, such as the safety of bonds over stocks, the risk-free allure of gold, and the fear of high price-to-earnings ratios, are not only misguided but could be damaging your investment portfolio.
In the book, you'll:
- Learn why many commonly held investment beliefs are wrong and how avoiding them can enhance your financial health
- Gain insights into better investment decisions for both short-term gains and long-term growth
- Understand how to identify and correct the mistakes that could be costing you
The Little Book of Market Myths equips readers with the necessary tools to identify and sidestep the pitfalls that have ensnared countless investors. Whether you're a seasoned investor or new to the world of finance, this book is an invaluable resource for anyone looking to improve their understanding of the market and make more informed investment choices.
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Seitenzahl: 203
Veröffentlichungsjahr: 2024
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Table of Contents
Cover
Table of Contents
Title Page
Copyright
Preface
Chapter One: Bonds Are Safer Than Stocks
Bonds Are Volatile, Too
Stocks Are Less Volatile Than Bonds?
Blame Evolution
Stocks Are Positive Much More Often Than Not
Stocks Are Positive – And Overwhelmingly Beat Bonds
The Stock Evolution
Notes
Chapter Two: Asset Allocation Shortcuts
The Critical Asset Allocation Decision
Getting Time Horizon Right
Inflation’s Insidious Impact
Notes
Chapter Three: Volatility and Only Volatility
Interest Rate Risk
Portfolio Risk and Food Risk
When Opportunity Doesn’t Knock
Notes
Chapter Four: More Volatile Than Ever
Volatility Goes Up, Too
Volatility Isn’t Predictive
Volatility Is Volatile – And Not Trending Higher
Hug a Speculator
Notes
Chapter Five: The Holy Grail – Capital Preservation and Growth
Capital Preservation Requires No Volatility …
… But Growth Requires Volatility
Notes
Chapter Six: The GDP – Stock Mismatch Crash
GDP Measures Output, Not Economic Health
Shrinking Government Spending Is Good, Not Bad
Too Far, Too Fast?
What Are Stocks?
Notes
Chapter Seven: 10% Forever!
Stock Returns Are Superior – And Variable
Don’t Be a CD Player
Notes
Chapter Eight: High Dividends for Sure Income
No Guarantees!
Homegrown Dividends
Notes
Chapter Nine: The Perma-Superiority of Small-Cap Value
Perma-Love or Heat Chasing?
Capitalism Basics
Notes
Chapter Ten: Wait Until You’re Sure
TGH at Work
The V-Bounce
Note
Chapter Eleven: Stop-Losses Stop Losses
The Stop-Loss Mechanics
Stock Prices Aren’t Serially Correlated
Pick a Level, Any Level
Chapter Twelve: High Unemployment Kills Stocks
See It Like a CEO
The Economy Leads, Unemployment Lags
The Stock Market Really Leads
Consumer Spending Is Incredibly Stable
Producers in the Driver’s Seat
Notes
Chapter Thirteen: Over-Indebted America
The Government Is a Stupid Spender
Putting Debt in Perspective
Question Everything!
The Real Issue … Affordability
Cheaper Debt After the Downgrade
Dependent on the Kindness of Strangers?
Nowhere to Go
Notes
Chapter Fourteen: Strong Dollar, Strong Stocks
Weak Dollar, Strong Dollar – Does It Matter?
Wiggles and Waggles Are a Wash
Think Inside the 4-Box
Notes
Chapter Fifteen: Turmoil Troubles Stocks
Notes
Chapter Sixteen: News You Can Use
Look the Other Way
A Sentiment Indicator
Interpret It to Use It
Ground Rules for Interpreting Media Profitably
Chapter Seventeen: Too Good to Be True
Separate Decision Maker and Custody
High and Steady … and Fake
Super-High … and Also Fake
Scams of All Stripes
Notes
Acknowledgements
About the Authors
End User License Agreement
List of Illustrations
Chapter 1
Exhibit 1.1 Five-Year Time Horizon – Volatility
Exhibit 1.2 20-Year Time Horizon – Volatility
Exhibit 1.3 30-Year Time Horizon – Volatility
Exhibit 1.4 Stocks’ Historical Frequency of Positive Returns
Chapter 2
Exhibit 2.1 Asset Allocation Impact – 70/20/10
Exhibit 2.2 Life Expectancy Keeps Getting Longer
Exhibit 2.3 Maintaining Purchasing Power
Chapter 3
Exhibit 3.1 10-Year Treasury Yields Since 1980
Exhibit 3.2 Interest Rate Risk
Chapter 4
Exhibit 4.1 Volatility Is Volatile – and Normal
Exhibit 4.2 Volatility and Onions
Chapter 6
Exhibit 6.1 US Stock Returns, Linear – Looks Are Deceptive
Exhibit 6.2 US Stock Returns, Logarithmic – Looks Are Deceptive
Exhibit 6.3 S&P Versus Earnings per Share
Chapter 7
Exhibit 7.1 Average Returns Aren’t Normal – Normal Returns Are Extreme...
Chapter 9
Exhibit 9.1 No One Style Is Best for All Time
Chapter 10
Exhibit 10.1 Hypothetical V-Bounce
Exhibit 10.2 A Real V-Bounce – 1942
Exhibit 10.3 A Real V-Bounce – 1974
Exhibit 10.4 A Real V-Bounce – 2002
Exhibit 10.5 A Real V-Bounce – 2009
Exhibit 10.6 A Real V-Bounce – 2020
Exhibit 10.7 First 3 and 12 Months of a New Bull Market – S&P 500
Chapter 12
Exhibit 12.1 Unemployment and Recessions, 1929 to 1976
Exhibit 12.2 Unemployment and Recessions, 1977 to 2024
Exhibit 12.3 Unemployment and S&P 500 Returns – Stocks Lead, Jobs Lag...
Exhibit 12.4 Components of Private Consumption – Services Are Huge and Stabl...
Exhibit 12.5 Consumer Spending as a Percent of GDP Rises in Recessions
Exhibit 12.6 Contributors to US GDP Decline Q1 2008 to Q2 2009
Chapter 13
Exhibit 13.1 US Net Public Debt as a Percent of GDP
Exhibit 13.2 UK Net Public Debt as a Percent of GDP
Exhibit 13.3 Federal Debt Interest Payments as a Percent of GDP
Exhibit 13.4 Who Actually Holds US Government Debt?
Exhibit 13.5 “Other” US Lenders
Exhibit 13.6 US and Other Sovereign Debt Issuers
Chapter 14
Exhibit 14.1 US Versus Non-US Stocks
Exhibit 14.2 US Stocks Versus the US Dollar
Exhibit 14.3 World Stocks Versus the US Dollar
Chapter 15
Exhibit 15.1 Never a Dull Moment
Guide
Cover
Table of Contents
Little Book Big Profits Series
Title Page
Copyright
Preface
Begin Reading
Acknowledgements
About the Authors
End User License Agreement
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Little Book Big Profits Series
In the Little Book series, the brightest icons in the financial world write on topics that range from tried-and-true investment strategies to tomorrow’s new trends. Each book offers a unique perspective on investing, allowing the reader to pick and choose from the very best in investment advice today.
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The Little Book of Common Sense Investing by John C. Bogle
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The Little Book of Big Dividends by Charles B. Carlson
The Little Book of Main Street Money by Jonathan Clements
The Little Book of Trading by Michael W. Covel
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The Little Book of Economics by Greg Ip
The Little Book of Sideways Markets by Vitaliy N. Katsenelson
The Little Book of Big Profits from Small Stocks by Hilary Kramer
The Little Book of Currency Trading by Kathy Lien
The Little Book of Bull’s Eye Investing by John Mauldin
The Little Book of Emerging Markets by Mark Mobius
The Little Book of Behavioral Investing by James Montier
The Little Book of Hedge Funds by Anthony Scaramucci
The Little Book of Bull Moves by Peter D. Schiff
The Little Book of Alternative Investments by Stein and DeMuth
The Little Book of Bulletproof Investing by Ben Stein and Phil DeMuth
The Little Book of Commodity Investing by John R. Stephenson
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The Little Book of Robo Investing by Elizabeth MacBride and Quian Liu
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THE LITTLE BOOK OF MARKET MYTHS
How to Profit by Avoiding the Investing Mistakes Everyone Else Makes
Second Edition
KEN FISHER
LARA W. HOFFMANS
CHRIS CIARMIELLO
Copyright © 2025 by Fisher Investments. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data is Available
ISBN 9781394283194 (Cloth)ISBN 9781394283170 (ePDF)ISBN 9781394283187 (ePub)
COVER DESIGN: PAUL MCCARTHY
Preface
QUESTIONING YOURSELF IS HARD.
One of the hardest things we do (or rather, don’t do). Folks don’t like questioning themselves. If we question, we might discover we’re wrong, causing humiliation and pain. Humans evolved over many millennia to take any number of extraordinary and often irrational steps to avoid even the risk of humiliation and pain.
Those instincts likely helped our long-distant ancestors avoid being mauled by wild beasts and starving through long winters. But these deeply imprinted instincts often are exactly wrong when it comes to more modern problems like frequently counterintuitive capital markets.
I often say investing success is two-thirds avoiding mistakes, one-third doing something right. If you can just avoid mistakes, you can lower your error rate. That alone should improve your results. If you can avoid mistakes and do something right on occasion, you will likely do better than most everyone. Better than most professionals!
Maybe you think avoiding mistakes is easy. Just don’t make mistakes! Who sets out to make them, anyway? But investors don’t make mistakes because they know they’re mistakes. They make them because they think they’re making smart decisions. Decisions they’ve made plenty of times and have seen other smart people make. They think they’re the right decisions because they don’t question.
After all, what sense does it make to question something that “everyone knows”? Or something that’s common sense? Or something you learned from someone supposedly smarter than you?
Waste of time, right?
No! You should always question everything you think you know. Not once, but every time you make an investing decision. It’s not hard. Well, functionally it’s not hard, though emotionally and instinctually, it might be. What’s the worst that can happen? You discover you were right all along, which is fun. No harm done. No humiliation!
Or … you discover you were wrong. And not just you, but the vast swaths of humanity who believe a false truth – just as you did! You’ve uncovered a mythology. And discovering something you previously thought to be true is actually myth saves you from making a potentially costly mistake (or making it again). That’s not humiliating, that’s beautiful. And potentially profitable.
The good news is, once you start questioning, it gets easier. You may think it impossible to do. After all, if it were easy, wouldn’t everyone do it? (Answer: No. Most people prefer the easy route of never questioning and never being humiliated.) But you can question anything and everything – and should. Start with those things you read in the paper or hear on TV and nod along with. If you’re nodding, you’ve found a truth you’ve probably never investigated much, if at all.
Like the near-universal belief high unemployment is economically bad and a stock market killer. I know of no one who says the reverse – that high unemployment doesn’t cause future economic doom. Yet, as I show in Chapter 12, unemployment is provably a late, lagging indicator and not indicative of future economic or market direction. And amazingly, recessions start when unemployment is at or near cyclical lows, not the reverse. The data prove that, and fundamentally it makes sense, once you start thinking how a CEO would (as I explain in the book). This is a myth I disprove using pretty easy-to-get data from public sources. Data that’s universally available and easy to compile! But few question this myth, so it endures.
This book covers some of the most widely believed market and economic myths – ones that routinely cause folks to see the world wrongly, leading to investing errors. Like America has “too much” debt, age should dictate asset allocation, high dividend stocks can produce reliable retirement income, stop-losses actually stop losses, and more. Many I’ve written about before in various books, but here I collect what I view as the most egregious myths and expand on them or use a different angle or updated data.
Then, too, I’ve written about many of these myths before simply because they are so widely and rigidly and wrongly believed. My guess is writing about them here again won’t convince many (or even most) the mythology is wrong. They’ll prefer the easy route and the mythology. And that’s ok. Because you may prefer the truth – which gives you an edge, a way to avoid making investment decisions based not on sound analysis and/or fundamental theory, but on a myth everyone believes just because.
Each chapter in the book is dedicated to one myth. Jump around! Read them all or just those that interest you. Either way, I hope the book helps you improve your investing results by helping you see the world a bit clearer. And I hope the examples included here inspire you to do some sleuthing on your own so you can uncover still more market mythology.
You’ll quickly see a few common characteristics throughout the chapters. A how-to manual to myth debunking, if you will. The tactics I use over and over to debunk these myths include:
Just asking if something is true. The first, most basic step. If you can’t do this, you can’t move to later steps.
Being counterintuitive. If “everyone knows” something, ask if the reverse might be true.
Checking history. Maybe everyone says XYZ just happened, and that’s bad. Or it would be so much better if ABC happened. Maybe that’s true, maybe not. You can check history to see if XYZ reliably led to bad or ABC to good. Ample free historical data exist for you to do this!
Running some simple correlations. If everyone believes X causes Y, you can check if it always does, sometimes does, or never does.
Scaling. If some number seems impossibly scary and large, put it in proper context. It may bring that fear down to size.
Thinking globally. Folks often presume the US is an island. It’s not – the US is heavily impacted by what happens outside its borders. And investors the world over tend to have similar fears, motivations, etc.
There are plenty of myths investors fall prey to – I couldn’t possibly cover them all here. But if you can get in your bones the beauty and power of questioning, over time, you should be fooled less by harmful myth and get better long-term results. So here we go.
Chapter OneBonds Are Safer Than Stocks
“Everyone knows bonds are safer than stocks.”
EVEN AFTER 2022’S BOND beatdown, that belief remains asset orthodoxy – a 100%, take-it-to-the-bank, of-course-the-sky-is-blue truism. After all, bonds still beat stocks in their atypically terrible 2022. Even investigating the idea stocks could be safer seems sacrilegious.
But beliefs so widely, broadly, universally held are often those that end up being utterly wrong – even backward.
So go ahead. Ask, “Are bonds safer?”
Initially, it may seem intuitive that typically plodding bonds are safer than stocks with their inherent wild wiggles. But I say, whether bonds are safer or not can depend on what you mean by “safe.”
There’s no technical definition – and huge room for interpretation. For example, one person might think “safe” means a low level of expected shorter-term volatility. No wiggles! Another person might think “safe” means an increased likelihood he achieves long-term goals, which may require a higher level of shorter-term volatility.
Bonds Are Volatile, Too
In 2022, many people learned the hard way that stocks aren’t the only asset with negative volatility – bonds wiggle, sometimes downward, as well! But that is nothing new. Bonds have always had price volatility. Their prices move in inverse relationship to interest rates. When interest rates rise, like in 2022, prices of currently issued bonds fall, and vice versa. So from year to year, as interest rates for varying categories of bonds move up and down, their prices move down and up. Some categories of bonds are more volatile than others – but in any given year, bonds can have negative returns – even benchmark US Treasurys, which plunged −17.0% in 2022.1
But overall, as a broader category, bonds typically aren’t as volatile as stocks – over shorter time periods.
That’s an important caveat. Over shorter time periods like a year or even five, bonds are less volatile. They have lower expected returns, too. But if your exclusive goal is mitigating volatility, and you don’t care about superior long-term returns, that may not bother you.
Exhibit 1.1 shows average annual returns and standard deviation (a common measure of volatility that shows the difference from the average return) over five-year rolling periods. It’s broken into a variety of allocations, including 100% stocks, 70% stocks/30% fixed income, 50%/50% and 100% fixed income.
Exhibit 1.1 Five-Year Time Horizon – Volatility
*Standard deviation represents the degree of fluctuations in historical returns. This risk measure is applied to five-year annualized rolling returns in the chart.
Source: Global Financial Data, Inc., as of 2/21/2024. US 10-Year Government Bond Index, S&P 500 Total Return Index, average rate of return for rolling five-year periods from 12/31/1925 – 12/31/2023.
Returns were superior for 100% stocks. And, not surprisingly, average standard deviation was higher for 100% stocks than for any allocation with fixed income – stocks were more volatile on average. The more fixed income in the allocation over rolling five-year periods, the lower the average standard deviation.
So far, I haven’t said anything that surprises you.
Everyone knows stocks are more volatile than bonds.
Stocks Are Less Volatile Than Bonds?
But hang on – if you increase your observation period, something happens. Exhibit 1.2 shows the same thing as Exhibit 1.1, but over rolling 20-year periods. Standard deviation for 100% stocks fell materially and was near identical to standard deviation for 100% fixed income. Returns were still superior for stocks – but with similar historic volatility.
Exhibit 1.2 20-Year Time Horizon – Volatility
*Standard deviation represents the degree of fluctuations in historical returns. This risk measure is applied to 20-year annualized rolling returns in the chart.
Source: Global Financial Data, Inc., as of 02/21/2024. US 10-Year Government Bond Index, S&P 500 Total Return Index, average rate of return for rolling 20-year periods from 12/31/1925 – 12/31/2023.
It gets more pronounced over 30-year time periods – shown in Exhibit 1.3. (If you think 30 years is an impossibly long investing time horizon, Chapter 2 is for you! Investors commonly assume a too-short time horizon – a 30-year time horizon likely isn’t unreasonable for most readers of this book.) Over rolling 30-year periods historically, average standard deviation for 100% stocks was lower than for 100% fixed income. Stocks had half the volatility but much better returns!
Exhibit 1.3 30-Year Time Horizon – Volatility
*Standard deviation represents the degree of fluctuations in historical returns. This risk measure is applied to 30-year annualized rolling returns in the chart.
Source: Global Financial Data, Inc., as of 2/21/2024. US 10-Year Government Bond Index, S&P 500 Total Return Index, average rate of return for rolling 30-year periods from 12/31/1925 – 12/31/2023.
Day to day, month to month and year to year, stocks can experience tremendous volatility – often much more than bonds. It can be emotionally tough to experience, but that
