Kenneth L. Fisher - The Little Book of Market Myths: How to Profit by Avoiding the Investing Mistakes Everyone Else Makes

Contents

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Preface

Questioning yourself is hard.

One of the hardest things we do (or rather, dont do). Folks dont like questioning themselves. If we question, we might discover were 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 likely do better than most everyone. Better than most professionals!

Maybe you think avoiding mistakes is easy. Just dont make mistakes! Who sets out to make them, anyway? But investors dont make mistakes because they know theyre mistakes. They make them because they think theyre making smart decisions. Decisions theyve made plenty of times and have seen other smart people make. They think theyre the right decisions because they dont question.

After all, what sense does it make to question something that everyone knows? Or something thats 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. Its not hard. Well, functionally its not hard, though emotionally and instinctually, it might be. Whats 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 truthjust as you did! Youve 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). Thats not humiliating, thats beautiful. And potentially profitable.