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Debunkery
Book

Debunkery

Learn It, Do It, and Profit From it — Seeing Through Wall Street's Money-Killing Myths

Ken Fisher and Lara Hoffmans
Wiley, 2010
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Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

Investment expert Ken Fisher understands what drives the financial markets, and he uses his knowledge and experience to debunk 50 widely held investment myths. Writing in a crisp, straightforward style, Fisher, collaborating with business writer Lara Hoffmans, presents research data that correct much of the investing public’s conventional – but flawed – wisdom. In the process, he explains what shapes markets at the macro and micro levels, and he applies principles of “behavioral finance” to show why people cling to popular but disproven market lore. The result is advice anyone can use to manage any portfolio. While the 50-myths format may be somewhat gimmicky, it’s fun and getAbstract thinks the book offers valuable information for investors of all experience levels. Realizing your investing weaknesses on its pages is both cheaper and easier than making expensive mistakes in the market.

Summary

The Power of Myth

Investors often forget that investing is about probability. Your goal is to be right more than you are wrong. Even the greatest market gurus are right only about 70% of the time. If you can improve your odds, you’ll be ahead in the investing game.

Investors of all stripes – even professionals and experienced individuals – often commit the same mistakes over and over, in part because they don’t grasp market psychology. Most people follow a herd mentality, or they fall prey to long-held prejudices, false doctrines and bad information. Or they stick with a winning strategy that eventually loses. To break this syndrome, learn to question common investment wisdom, adopt a scientific approach and recognize that you’re still likely to make mistakes. Accept that unprofitable deals are an inherent part of the investment process. Be aware of 50 commonly held myths about the capital markets, and the facts that debunk them:

  1. “Bonds are safer than stocks” – Over time, stocks produce less-risky, more-positive returns than Treasury bonds. When inflation hits, bond prices fall, and bondholders eventually get repaid in inflation-reduced dollars.

About the Authors

Ken Fisher writes the “Portfolio Strategy” column for Forbes magazine. He is the founder and CEO of Fisher Investments, where Lara Hoffmans is a content manager.

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