Copyright
Copyright 2009 by Fisher Investments. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Important Disclaimers: This book reflects personal opinions, viewpoints, and analyses of the author and should not be regarded as a description of advisory services provided by Fisher Investments or performance returns of any Fisher Investments client. Fisher Investments manages its clients' accounts using a variety of investment techniques and strategies not necessarily discussed in this book. Nothing in this book constitutes investment advice or any recommendation with respect to a particular country, sector, industry, security, or portfolio of securities. All information is impersonal and not tailored to the circumstances or investment needs of any specific person. The strategies contained herein may not be suitable for your situation. Consult a professional where appropriate. Investments in securities involve the risk of loss, and investing in foreign securities involves additional risks such as losses related to currencies and other securities markets. Past performance is never a guarantee of future results.
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Library of Congress Cataloging-in-Publication Data:
Hanson, Michael J., 1979
20/20 money : see the markets clearly and invest better than the pros / Michael Hanson.
p. cm. (Fisher Investments Press)
Includes bibliographical references and index.
ISBN 978-0-470-28539-8 (cloth)
1. Investments. 2. Investment analysis. 3. Portfolio management. 4. Speculation.
I. Title. II. Title: Twenty, twenty money.
HG4521.H2384 2009
332.6dc22
2009000841
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
Acknowledgments
Of all the professional gifts I have been given, learning how to thinkhow to see the world and make one's way in itis the best one I can imagine. It's been my great privilege to serve and learn under Ken Fisher, Andrew Teufel, and Jeff Silkthe three members of Fisher Investments' Investment Policy Committee. From them, I have obtained skills and lessons that will remain with me the rest of my days. In some sense, I owe everyone at Fisher Investments a debt of gratitude, for if it's true that we are only as good as those we choose to work with, I am humbled by the thought.
It's also true that hard work and desire mean nothing without opportunity, and in that spirit I owe a great deal of thanks to Andrew Teufel and Fabrizio Ornanitwo who gave me more chances than I probably deserved and believed in me to achieve when there was often little reason to.
Then there is Lara Hoffmans. Good writing, even investment writing, is about clarity, intelligence, daring, freedom, and energy. None of that exists without her presence and influence on Fisher Investments Press. And that is especially true of this book and the daily work we do at Fisher Investments' MarketMinder.com
website.
Anyone who's ever written anything knows first drafts are always terrible. It's in the editing process a manuscript goes from dreadful to serviceable, eventually becoming something worthwhile. I owe Dina Ezzat, Ashley Muth, and Evelyn Chea much thanks in that effort, and also Jason Dorrier and Carolyn Feng for their honest opinions when I needed them. The same goes for the team at Wiley, especially David Pugh and Kelly O'Connortheir expertise and guidance, on issues large and small, always made a big difference. And Marc Haberman and Molly Lienesch deserve enormous credit for making Fisher Investments Press a reality.
Last, investing books aren't much without data. So the help I received from the Fisher Investments Research Department was invaluable throughout the process, and the same is true for the folks at Thomson Datastream, MSCI Inc., and Global Financial Data for providing the data for our research.
Introduction
We need a new investing lens. Most investor mistakes come from blindness about the basic ways markets work and the best strategies to invest. This book is designed to be a set of glasses to help you see the markets more clearly. Having 20/20 investing vision means making more money, and that's my ultimate goal for you.
Sight is by far the most important human senselife as we know it is more or less impossible without it. But the notion of sight is also one of life's most important metaphors. We often talk about sight when we really mean understanding. We have "visions" about the future, we "see things clearly," we have "points of view," and so on. To see, in other words, is to understand.
Too many investors are blinded by conventional investing ideas that don't work. This book is about seeing the stock investing landscape clearlyinvestigating new ideas and challenging widely held conventions. I wrote this book to tell investors the things I wish they knew about investing, to give them a clearer view and thus make better decisions.
I'm no investing guru, but I work for one. For years, I've been an analyst working under Ken Fisher. In that time, I've learned his methods and have also studied the methods of many others. One day, just a few weeks into my career at Fisher Investments, Ken addressed a group of employees. He said, "If you want to be any good at investing, you have to go out and learn about the whole world and how it works." That will stick with me forever.
"Learning how the world works" is a tricky thing. Most investors will attack the problem by seeking "the rules." People crave conventions, laws, systems ... predictable order. The fact is, there is no "black box" or rule set you can follow for successful investing. If there were, we'd all just do so and be trillionaires by now. If there's one thing I'm sure of, it's that there is never "enough" learning about the world because the world is always changing. Investing successfully is closer to "being along for the ride" than coming to some grand conclusion or final wisdom.