Sunday, December 12, 2010

Exclusive Interview with Ken Fisher Part 7 - Can Traders Make Money

Ken Fisher is a money manager, and on the list of the Forbes 400 Richest Americans. He is also a Forbes columnist, where he recently recommended several income stocks, such as Sims Metal Management (SMS), Net Servicos de Comunicacao (NETC), and PetroChina (PTR). His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 7
Please note: The complete interview took place on Wednesday, October 27, 2010

There was an article recently about how some investors got early retirement, they had nothing better to do, did a lot of research on their stocks, and were very successful. The article talked about one guy who built his portfolio from $30,000 to $3,000,000. Do you think that article was about an aberration or just looking at one end of the bell curve?

That's looking at the very few people who are definitely one tip of the bell curve.

And it's not the average investor that could possibly consider it unless they had an extreme amount of luck to achieve anywhere near that.

The average investor by definition cannot do that. The average investor cannot possibly beat the market. The average investor, at most, can equal the market.

Speaking of playing the market, the Bunk chapter on swine flu and some of the other things. It seems like someone who trades or does short term investing could actually play the opposite of some of these bunks. The swine flu could be an example or some other major catastrophe where the market has a temporary sell-off, and if you are mentally set to go into the market to do the opposite, a trader could actually do fairly well playing to opposite of the common bunks. Would you agree with that?

I think that's possible but for the average person that thinks it’s a trade, that he or she is a trader, is exceptionally unlikely. In fact, when we look at the history of traders, most of them don't do very well.

Said another way, if you say who are the traders we can think of that have become legendary investors, are really, really rich and successful as traders, there aren't very many of them; although we have a lot of traders in total, which tells you that it's another one of those things where it’s a tip of the bell curve where people have a knack to do that but they're very unusual and they are probably least like our primitive stone age ancestors. They probably have the leave behavioral finance issues embedded into their brains for some reason.

But there aren't very many of those people and the odds of anyone being one of those people is small.

If the person that can trade these things, which I do believe there are people who can do it but its not me that's for sure, if there are people good enough to trade these, they are good enough to trade all kinds of other things.

So another one of the bunks that you will remember reading about is my comments about gold, and gold is basically a thing where if you're a very good trader, gold might be a good thing for you but gold has had an OK return but a huge volatility over time, and 85% of history on a monthly basis has lost money, and made all its total return out of 15% of the months. If you're a good enough trader, you should be able to trade gold successfully and you should be able to trade all kins of other things too. And you don't need an trading advice from me, that's for darn sure.

The fundamental nature of those rare George Soros like traders or Paul Tudor Jones type people, the people at have made money off of trading that have gotten good returns and have had some consistency, because you can trade gold, you can trade oil, you can probably trade swine flu, but most people aren't very good traders.

End of Part 7

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns, including high dividend stocks, are available in the form of a free Excel list at

Part 1 of this interview is available HERE.

Part 2 of this interview is available HERE.

Part 3 of this interview is available HERE.

Part 4 of this interview is available HERE.

Part 5 of this interview is available HERE.

Part 6 of this interview is available HERE.

By Fred Fuld at

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the articles were written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

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