My reading radar always beeps when an investment book claims a contrarian angle, so Ken Fisher’s new book, Beat The Crowd: How You Can Out-invest the Herd by Thinking Differently, seemed a natural into which to sink my teeth.
Mr Fisher is well-known in US investment circles as a long-standing Forbes columnist, and his dust-wrapper highlights his stream of best-selling books, his asset management firm which runs US$65bn (£41.4bn), and his billionaire status.
In the UK, Mr Fisher is probably better known through the never-ending stream of letters sent to potential clients of his company’s investment proposition for high net-worth individuals. In fact, the Mundy household is probably offered more chances to use his company’s services than to purchase any size and type of pizza for £6.99.
Beat The Crowd is premised on an encouraging claim – to make money, one must think differently from the crowd. And Mr Fisher rightly highlights that being a contrarian is not simply taking the contrary view from that of the consensus, but rather believing something different will happen from what the consensus believes.
However, rather than providing instructions on how to reach this non-consensual decision, Mr Fisher instead wanders off and finds a number of semi-related issues on which to rant. Sometimes the reader feels he is listening to one of those people who ring phone-in programmes in the middle of the day – there may be a good point to be made, but it is lost in the tirade.
Mr Fisher goes over some well-trodden ground. For example, he shows that market commentators often incorrectly forecast market movements. However, his explanation of whether to assume their error is to be too high or too low is vague at best. He then suggests that these errors become well-known, and the opportunity to trade against them becomes diminished. I assume, however, that this is only discovered by making losses on the trades.
The chapter titles are certainly eye-catching. Not in the Next 30 Months explains to the reader that worrying about any potential bad situation that is more than two and a half years in the future is simply a waste of time, as either the problem will be solved, turn out to be wrong, or simply not be in the eyeline of investors. I recall the fact that Mr Fisher’s 2006 book, The Only Three Questions That Count, stressed how good debt was. Evidently, it was not as good as he had believed – a decision that investors made within 30 months of the book being published.
Mr Fisher is clearly a very successful businessman, a bestselling author, and he may well be a very successful investor, but his writing style is less effective. For those who want to understand his views without losing more than a few hours of their lives, his book, The Little Book of Market Myths is a far easier – and shorter – read.
I shall, however, like any good phone-in host, leave the last word to the caller. Mr Fisher titles chapter eight of his book, Throw Away This Book!. It is hard to disagree with his sentiment.
Published by Wiley
Alastair Mundy is a portfolio manager of Investec UK Special Situations Fund.
