People do dollar cost averaging because they have regret of making one big mistake. But the fact of the matter is that, mathematically, the market rises more of the time than it falls. It falls, but it rises more of the time than it falls.
Kenneth Fisher
When I was a young man in the 1970s, tech firms were scattered across the developed world. Since then, America has come to dominate tech almost totally.
If you've taken Econ 101, you know that the quantity of money rises only when the banking system makes a net loan.
Both cheap value stocks and more glamorous growth stocks can work well in a portfolio - if done right.
Back in the '60s and '70s, data were scarce, and while analysts knew that companies with fat gross margins lagged those with thin gross margins early in bull markets - and overachieved in the later phases - they couldn't do much about it.
Plenty of funds have fine long-term returns despite being tax-inefficient and generally costly. But a dirty secret is this: Average, no-load fund investors do much worse than the funds - or the market.
A constant in my approach to investing: You should think politically but unconventionally.
What is the most common investor mistake? Trading - getting in and getting out at all the wrong times, for all the wrong reasons.
In history, the evidence is overwhelming: Stock market bottoms happen, and then stocks jolt upwards while the economy keeps getting worse - sometimes by a lot and for a long time.
Buy into good, well-researched companies and then wait. Let's call it a sit-on-your-hands investment strategy.
Fracking opens up vast tracts of the U.S. to exploitation by gas drillers. There's enough energy under our feet to last us for decades, maybe centuries.
China frequently confounds stock market prognosticators because it has a penchant for straying markedly from other broad global indexes year-by-year over the decades - even from emerging markets. It's hit or miss.
I never liked quantitative easing. It's misunderstood by almost everybody. Flattening the yield curve is not stimulative; flattening the yield curve is anti-stimulative.
If you can predict where the market's going, just do what you can predict. If you can't, which is the presumption of dollar cost averaging or time cost averaging, either one, then you're trying to ease in. But if the market rises more than it falls most of the time, easing in is, by definition, a loser's game.
China's stock market is inextricably tied to politics.
Normally, the market peaks before bad news emerges. That's what happened in 1929, and that's what happened in 2000.
The bubble, as investing phenomenon, has been well studied ever since the 17th-century tulip bulb frenzy. Its counterpart in bear markets is not well understood.
One component of the leading economic indicators is the yield curve. Bond investors keep a close eye on this, as it illustrates the spread or difference between long-term interest rates and short-term ones.
Environmentalists should like fracking for its relative cleanliness. But they don't. They have made a bugaboo out of the chemicals in fracking fluids, which supposedly can leach into groundwater sources. I'm convinced they're dead wrong. Ultimately, good technology with a cost advantage will win out over paranoia.
Anyone can see how if a feared tax hike doesn't happen, that's a positive factor. But even if tax hikes happen as feared, vast history tells me it doesn't have to have the big bad impact folks fear. And fear of a false factor is always bullish.
Long before folks fretted the demise of 'quantitative easing,' I fretted its existence. It proved the reverse of its image, an antistimulus, and we've done okay not because of it, but despite it.
Most investors give too much credence to the theory that prices are rational; they presume that a market collapse must have been justified by serious economic trouble.
Buying only what you know can end in disaster. Just think about Enron's employees and business partners, the 'locals' who bought lots of its stock because they thought they were in the know.
The upward move at the beginning of a bull market is almost always huge compared with the vacillations late in the bear market. If you try to pick a bottom, you will miss a good part of the action.
The stock market is a discounter of all known information.
The latter part of bull markets are typically led by stocks that are seen then as high quality, but the ones that do best are the ones that weren't seen as such high quality before.
Normally, if you have a huge category that leads a bear market all the way down to the bottom - like tech after 2000, or energy in the '80-'82 bear market - you get one quick pop, and then years of lag as we fight the old war.
Readers regularly ask what can go wrong but almost never what could positively surprise.
Investors covet past improvements but also always believe pricing unimaginable future creativity and efficiency gains is Pollyannaish. And they're always wrong. Bet on it.
If some stock categories get too hot-and-pricey, mass supply is created via stock offerings to tap that cheap money - and, when overdone, drives it all down.
You may have seen my firm's ads screaming, 'I Hate Annuities.' Folks ask why we run them. Simple: Because I do.
Over rolling long periods, U.S. and non-U.S. stocks tend to equalize.
All equity categories, correctly calculated, create near-identical lifelong returns. They just get there via wildly differing paths.
Having different types of stocks in your portfolio can enhance returns.
Generally, variations in earnings aren't nearly as impactful on glamour growth stocks as are changes in image and, well, sexiness. I often think of glamour stocks as though they are attractive women dressing to the nines.
Fundamentally cheap stocks are often held in low regard by market participants. Something may be tainting their perception in investors' minds.
The average mutual fund holding period for equity or fixed income is only about three years. It's too short.
Hundreds of investors ask me questions each year about the dilemmas they confront. Their worst problem? Uncertainty. They are traumatized and become emotional or confused to the state of inaction. Even worse, they try to solve a short-term problem in a way that hurts them financially in the long run.
If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
To me 'The Big Easy' is shorthand for owning big stocks that are easy for wary investors to buy into. These stocks tend to outperform during the back half of bull markets.
Indeed, bull markets are fueled by successive waves of prior skeptics finally capitulating as their fears fade. Eventually, fear turns to euphoria, and that's the stuff of bubbles.
The more you talk about investing problems, the worse you feel. Instead of complaining, it's better to do something.
My father, Philip Fisher, was the toughest guy I ever knew. An example: He had terrible teeth, yet he got his fillings done without ever using a painkiller. Now, that's tough!
Italians have always had a high savings rate. They love putting their money into their own government bonds - even more than in houses, stocks and gold. The higher rates climb, the happier they are to invest. So if austerity plans drive rates up, it's music to Italian ears.
I've long loved emerging markets airlines because they usually sell at bargain prices. The troubled history of developed market airlines unfairly taints these stocks. In the emerging world, they're growth stocks.
Many follow a rule of thumb - no more than 5% in one stock. But that's not the entrepreneurial road to riches.
The world is filled with successful small businesses that stay small.
If you're 35, 45, or even 55 - you have a very long time horizon - 40 years or vastly more. That is you, and/or your spouse, are likely to live about that long, and you'll be investing the whole way.
I'm sometimes accused of being hostile to mutual funds. That's not fair, really. There is a place for them. Still, I am hostile to one thing, which is trying to use funds to time your way in and out of the market. That's a recipe for very bad results.
Despite its many critics, hydraulic fracturing will change the nature of energy production.
