Kenneth L. Fisher - The Ken Fisher Classics Collection

Contents

FOREWORD

Dear e-reader,

You are part of something supremely coola transformational wave of innovation that even 20 years ago would have seemed like science fiction.

When I wrote the first edition of The Only Three Questions That Count (included in this bundle is the fifth-year anniversary second edition) in 2006 for 2007 publication, no one was doing e-booksat least not in any way that remotely resembles how theyre done now. The first-generation Kindle was released in 2007. This unleashed a torrent of competitive products and profoundly changed the way publishers approach publishing. Now if you release a book, you also have to release an e-bookthe demand is massive. Amazon reports it sells more e-books than paperbacks! Amazing.

The world changes fast. Innovation is a constantsometimes it happens faster, sometimes slower. What doesnt change very quickly is human behavior. This is excellent news for investorsbecause if you can learn how the rest of the world is likely to respond, how they are likely to view markets, and how your own brain is likely to trip you up, you can improve your investing results by improving your own error rate.

The three books in this collection aimeach book in its own wayto help you invest better by seeing the world more clearly.

The Only Three Questions That Still Count is the 2011 re-do of my 2007 bestselling book The Only Three Questions That Count . It is designed to give you the only basis for a market bet: knowing what others dont know (which sounds impossible, but it isnt). I teach readers how to develop a reusable framework using a scientific methodThe Three Questions. The first question helps you understand how you dont see the world clearly. The second helps you see things others cant. And the third helps you understand how your own brain is often your biggest enemy.

Debunkery , my book from 2010, focuses like a laser on market myths. Believe high P/Es automatically signal increased risk? Believe high oil prices drive stocks down? Believe passive investing is easy? Believe higher taxes are always bad for stocks? These are just a few examples of myths or demi-myths covered in the bookmyths that frequently cause investors to make costly mistakes.

Finally, Markets Never Forget (published in 2011 shows you how to shape better forward-looking expectations by using history. The past is never predictive, but it is an excellent lab for testing whether or not what you believe (and what most people believe) is true. For example, if you study history, youd know that 2008 (a terrible market year) wasnt unusually volatile, and 2009 (a terrific market year) was actually more volatile. Youd know gold is the ultimate short-term timers game. Youd know double-dip recessions are incredibly rare (though constantly predicted) and secular bear markets havent happened at allnot in global stocks. And youd know that people almost always believe its different this timeand it never is, really. Humanity doesnt evolve fast enough to make our reactions to events all that radically different.

I hope you enjoy these three books, and I hope they immediately start you down the path of improving your investing error rate.

Ken Fisher

CEO, Fisher Investments

CONTENTS

Copyright 2012 by Fisher Investments. All rights reserved.

This book is a revised edition of The Only Three Questions That Still Count: Investing By Knowing What Others Dont published by John Wiley & Sons, Inc., 2007

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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ISBN 978-1-118-11508-4; ISBN 978-1-118-22421-2 (ebk); ISBN 978-1-118-23755-7 (ebk); ISBN 978-1-118-26246-7 (ebk)

PREFACE

Who Am I to Tell You Something That Counts?

Who am I to tell you anything, much less anything that counts? Or that there are only three questions that count and I know what they are? Why should you bother reading any of this? Why listen to me at all?

As I update this book in 2011 for its second edition, Ive been in the investment industry for nearly 40 years. I founded and am CEO of what is among the worlds largest independent discretionary money management firms, serving tens of thousands of high net worth individuals and an impressive roster of institutionsmajor corporate and public pension plans and endowments and foundationsspanning the globe. Ive written Forbess Portfolio Strategy column for over 27 years, making me the fourth longest-running columnist in Forbess long history. I write regular columns in Britain and Germany. And now, Ive written eight books, five of which (including this one) were national bestsellers. Along the way, and without really aiming at it, I made the Forbes 400 list of richest Americans.