Ken Fisher Knew Something That Wasn’t So

Don’t buy it. For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007’s housing disaster turns out to be. Well, there won’t be any housing disaster. We won’t have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.

You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now.

Did you know that housing sales are up in the last few months, not down, and that inventories are lower than six months ago? We’re accelerating, not landing. This is true not just in housing but also pretty much across the board.

– Ken Fisher, “Housing Boom!”, Forbes Magazine, February 26, 2007 (bold and italics added; Hat tip The Big Picture)

Does any investment advisor market himself more than Ken Fisher of Fisher Investments?  You can’t get away from the guy.  He’s everywhere: on CNBC, on Yahoo!, TheStreet.com, Forbes, etc…

Doing so has helped him crack the Forbes 400 list of the 400 wealthiest people in the world (he’s #271 on the 2007 list).

His new big idea from his book The Only Three Questions That Count: Investing By Knowing What Others Don’t (2007) is that you make money by having some kind of edge i.e. knowing something others don’t.

I’ve heard that line over and over again on his commercial that is currently running on CNBC.

This is clearly correct as any good or bad news that is widely known is already reflected in security prices.  In order to profit you need to understand something that is not widely known and therefore not already “in” security prices – and make an investment that will profit as others begin to understand what you already know.

The problem is when you know something that others don’t – that just ain’t so!  Then you have to come around to their way of thinking and the investments you made on your special insight don’t work out so well.

See, for example, the action in the homebuilder stocks (Pulte, Toll, Beazer) Fisher recommended in his February 26, 2007 Forbes column: Pulte and Beazer are each down more than 50% and Toll is down about 33%.