Interview With Ken Fisher (Part 2): Masters in Business (Audio)

Ken Fisher and just a really quick story. The first time I had Ken Fisher as a guest. Uh. We had a conversation that was quite fascinating. I'm intrigued by the business he's built and how successful he's been operating in a way that the rest of the world to finance just hasn't and he really has created what is a unique path to build a very successful firm. After we finished the interview, we walked over and we I think we were in the green room um of the

television area. He had a somewhere else he was heading to or appearing, and we started talking. After we talked for ninety minutes last time, and that ten minute or so conversation made it clear to me, Gee, there's a ton of stuff I didn't get to. I want to talk to you about his business, how he grew, with the things he did, and so when I saw he was coming back into town. I think it's about uh two years since our last interview, UM, I jumped at

the opportunity to interview him again. This is a very much a business focused conversation. We talked about markets and stocks and everything else, and his love of annuities, but we also talked about how he built his business. UH, and I found that absolutely fascinating and I think you will also, So, with no further ado, my conversation with Ken Fisher. This is Master's in Business with Barry Ridholtz

on Boomberg Radio. My special guest today is Ken Fisher. UH. He is the founder and chief executive of Fisher Investments, which manages just under eighty billion dollars. Ken has been named one of the twenty five most influential figures in the financial industry. He's the author of a dozen or so books, half of which have been New York Times best sellers. He was named I Think you were Number

two twenty five on the Forbes four hundred list. Is that, Uh, that's good because normally under two hundreds, No, it doesn't count you. You're not even median, really, so median meet medians, you know, two hundreds. So I was always below average. Well, Ken Fisher, welcome back to Bloomberg, you know, and and and it's tough to be above average. It is tough to be above everybody in money matter. So let's jump right into the concept of building a business based on

the dying art of stock picking. And the first question is is it truly a dying art? You know, I think stock picking was always very tough. I don't think it's any tougher than it ever was. I think there's more light being shown on that. Now. That's a really interesting fact is that when I was young, a long time ago, there was very little, uh sort of data analytics. Uh, there was very just think a computerization and all those features on how primitive that was in that world then.

And the I was at an event yesterday and John Bogo was speaking, and he was making the point that he had actually done analytical work in nineteen sixty one showing that average on average active investors lagged uh the market. And yet while you could do that analytical work in nineteen sixty one. Uh, the public perception of it really didn't much exist for a very very long time. And he talked to some length about how agonizingly slow that

was for him. Uh. And yet often things that change in the world change like that, where for a long time they go nowhere fast and then lowly they start getting traction and continue. Um. I don't think countered at some people's perception because passive is all the rage right now. I don't think active ever disappears. Um. But stock picking an active management have always been tough to do and succeed at. So a couple of I'm hearing a couple

of things. First, the analytics are much more readily available to anybody who wants to sit down at at Google Finance or Bloomberg Terminal and look at the numbers. But then you mentioned Jack Boglane. They didn't launch their index funds till seventy four, and he describes it as a colossal failure at first, that the five years, five years of failure, right just did nothing attracted almost no ask no I remember that world. I mean, I was, you know, I was in this realm of endeavor in those days.

And I remember that world at the time, and of course you know the big cahuna and mutual funds at the time with Dreyfuss and uh, yet the war was for it different. And I also remember that in those days, you know, Forbes big annual issue was its mutual fund special, and the mutual fund special had I'm not talking about a couple of hundred fund families. They had a couple of hundred funds in the mutual fund special because there weren't that many mutual funds in the world a where

there are today. All of this evolution is a slow evolution and that's not abnormal that that's that's fascinating the fifty five years later. You know the old joke isn't only takes only takes a decade to be an overnight sensation. Um, so you've built a huge r I A based on what I have to think is a somewhat different process than many of the larger asset managers build. What what

makes the ken Fisher approach so unique? When I was young, I became very enamored early, very early on in nineteen with New Course Steel and New Course Steel New Ork operation, the steal manufacturer when it was just starting into steal ken Iverson. I came by coincidence to get to know and I was very impressed by what he was doing. And uh, he taught me that steel production was a function of multiple compound yields and if you could keep you didn't have to be the best in any one

of them. You had to have the best combination of all of them. And then sounds like a portfolio. Then when I studied IBM, I saw that they never ever had the best computer. They always had a very good computer, but they never ever the best one. But if you took all of the pieces of what they did sales serve us, all of the pieces together they compounded to the best totality for the customer. And what I would like to think is that we from the beginning started

thinking about all of those pieces. So, you know, people tend to think of us in terms of our advertising because that's what they see. That's a really wrong notion. We do a lot of advertising, that's true, but we're not actually very good at it as nearly as good as I'd like to be. We, on the other and are exceptional at service. And people don't have a most people in the world don't have a clue about our

service capabilities. We do all kinds of things in service other people don't do, and then we have a good give me for instance, or is that like the secret source that secrets you know? We We have an elaborate array across the English speaking world of UM a variety of forms of client only seminars. These are not sales seminars.

These service seminars for clients and their families that come in different types because different people receive information differently, and they range from very large ones with five people at a crack run by senior people at the firm, providing hours literally hours of both couple hours of presentation of detailed information as to how we're seeing things and why we're thinking this and why we're not thinking that, etcetera, etcetera,

which include an education component all along with DNA, followed by a couple of hours of Q and A now all the way down to tiny little events run by people who are MN I see tiny little ten twelve people, ten TOLF customers and with technical answers being only answering questions.

Two events that we do to nobody else in the world would do where we put you know, twelve twenty clients together for a lunch and there's nobody from Fisher there at all, and we let them talk about whatever they want to talk about, so they can talk about us behind their back. Because for a lot of people, actually that's the proof of the pudding is being able to talk about their advisor behind their back and know that the advisor trusts them enough to do that. Therefore

they have an increased trust level in the advisor. I'm Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio. My special guest today is Ken Fisher of Fisher Investments, a firm that manages just about eighty billion dollars in assets. Let's talk a little bit about where we are today in the world. It's seventeen for those you listening to this far off in the future. Valuations in the US

have been called high. Interest rates are low, there's not a whole lot of inflation, and the Fed has said that they're starting a series of rate hikes to normalize interest rates. First question is how unusual a set of circumstances is the stock market in today? UM I would say that the stock market is in its um usual unique position. The stock market I went to wait, wait, before you go forward, I have to put that in quotes,

usual unique position. Yeah, the stock market is always full of what appears to be morphing into different unique things. People are almost always to my opic about the features that we confront today that always seem to be so different and so unique and so unusual, and in retrospect appear not to be when I say retrospect, far retrospect, and um, all of the things that you said are quite literally correct. Uh, but I don't think that has much to do with real fundamentals. So how do the

fundamentals look here? What do you see at this point in in the market cycle. Valuations are high because interest rates are low. Uh, they of course important interest rate that really matters is the long rate, not the short rate so much. And uh, you know, people have been forecasting long rates to rise for a long time, and they've always been wrong, and they'll be wrong again this year.

And uh, I mean you can just kind of count on them being wrong every ry, you know, every once in a while they get to be right for a little while before they end up being wrong. But the consensus has to be wrong, because that's the market pre pricing all widely known information. That's what capital markets theory says markets do for a living, and they do it pretty well, not perfectly, but pretty well. So valuations in the US are stretched. What about I don't think though

you don't think so. I think valuations are if you think of pees. For first of all, I'm getting ready for that. He ees have never been predictive, for sure. And uh, the Schiller cape pe folk always talk about that it's really only intended for ten years down the road, but then they apply it almost always to next month.

And the fact of the matter is that the Schiller kpe P has been wrong so long, so many times that anyone should know not to use it for any kind of even intermediate term timing, and yet people forget that. I keep let's stay with k SEK. I totally agree with you. I think going back to CAPE has been

above its long term average for the time. However, as Bob Shiller would say, when you buy, if you take the average CAPE at fifteen or sixteen, if you're buying stocks when you're at above average valuations, your forward expected return should be below average. And when you're buying Cape at below average PE, your forward expectations should be above average. Is that a fair statement the professor makes or do you disregard that? I think it totally ignores behavioral realities

of what humans are. Uh. What the way humans are is that if the next ten years are going to be lousy, but the next five years are going to be great, Uh, people are gonna lose their mind before the next five years are over, and then they'll lose their mind differently five years after them. Okay, and that's fair. And the fact of the matter is that, uh, the CAPE has never been good at short term timing, and therefore that should have nothing to do with what your

short term expectations are. And the reality is that a little, as I was saying before, if we could say with certainty, which of course we cannot, that the market was going to be great for the next three or four years, people would want to be in it. And the notion that I'm going to stay out of the market for three or four years while it does rate, or be out of the market for three or four years while it does great, or suffer three or four years of

terrible nous. Look at the people that became Perma Bears after two thousand seven nine and got totally whips odd and in record all the time. I got out No. Eight, but I thought people crazy jumping back in in March O nine. And I've said on the sidelines for seven years that is not a rare state. No, it's it's it's more common than not. It's what behavioralism says, people.

Do you know? So again, I was in the earlier segment I mentioned listening to John Bogo yesterday, and I admire the man greatly, but he said some things are just wrong, such as, uh, well, the first part of what he said here was right. He said that one of the things that slowed down the growth of passive was that the eighties and nineties or two decades back to back, with seventeen percent average annuals five hundred returns.

That seems reasonable, and that's true. And then he said, and uh, the average mutual fund did a couple of percent worse than the equity mutual fund did a couple of percent worse. Not got about fifteen. And he said, since investor sounds probable, Yeah, he said, so, since investors were getting fifteen, they didn't really care. So much about relative returns because the high absolute returns and made him happy. All that sounds plausible, but the reality is that that's wrong.

The reality is they didn't get anything light close to fifteen percent because as all the behavioral studies show people in and out of all the wrong times and they typically get about half the return of the equity funds because they end owed him at all the wrong time. The dl BAR studies shows people underperform their own investments, which on the surface sounds ridiculous, but for your reasons,

it's normal for behavioral purposes. And so in reality, what he said that was wrong is that in that period people didn't get returns like our returns to look more like seven and they actually switched quite a lot from this to that and chase things. And in the mid nineties and nine, four and five, before the market took off, they get terribly desponded. And it was all that period

where you know the uh. In UH two, George rowarka Bush is running for reelection and he's saying the recessions over and people saying, no, it's not, and Bill Clinton saying it's the economy stupid. Well, in retrospective recession, was over. That's not the way people felt, and people voted with the way they felt. And also they invested the way

they felt. And that's the problem. People invest the way they feel, and the way they feel is almost always backward looking, and and they in and out at all the wrong times, and that generates much more cost than anything else. And there's all these studies going back to things like dal Bar that are perverse in that they show that things like load mutual funds do worse than

no load mutual funds. But the people that invest in the load mutual funds do better than the people invest in the no load mutual funds because they feel trapped in them, and they hold them much longer, which is very perverse, that is, you know. And then and then everybody says, I would never do that, And then of course that's true for a very small percentage of the population.

Most people do that. I saw something very recently, and I don't I don't want to cite the wrong them that wrote it, but they pointed out the difference between soft economic data like sentiment and actual hard and economic data like GDP seals, etcetera. And they said the gap between the sentiment and the reality is the biggest it's

been as long as you've been tracking such. So another way to say that verry that I've become fond of is that economic marginality, as taught by Alfred Marshall, marginality

has been marginalized. Marginality has been marginalized. Yes, the reality of economic marginality is that intuitively, an idiot knows that the difference between the viability of a loan for a CAPEX project at today's interest rates versus half a point higher or lower should be immaterial to whether the CAPEX project should go forward or not, because if you can't justify the return at a half a point higher or lower from where we are today, it's got to be

a pretty lousy project to begin with. And the fact is that it really more about what hasn't been marginalized is a shift in animal spirits, which is your sentiment point, and we really need to find ourselves in a CAPEX sense and in all other ways. Uh, moving toward that animal spirit that says I'm not afraid because of agency risk, which you know after two thousand nine CEO s were

hunkered down for for agency purposes. I am optimistic that this project will work, and I'm going to invest in this project and make this improvement for the benefit of my customers and the world. And that's really a sentiment issue. It's not really uh, interest rates or a quarter point higher, So I'm not going to move forward. I'm very rid Helts. You're listening to Masters in Business on Bloomberg Radio. My

guest today is Ken Fisher. He is the executive chairman and co chief investment officer of Fisher Investments, a twenty person firm manage in just under eighty billion dollars. He's the author of a number of best selling books on markets and investing. Let's talk a little bit about an insurance product that you're pretty vocal about. I keep reading why does Ken Fisher hate annuities? That that's an advertisement that I've seen online. Tell us about your views of annuities.

Let's see. Um, let me just say the simple line, I hate annuities. Uh uh so why why do you? First of all, let's define annuities. For for most people, it's a tax deferred products that is sold by insurance breakers with a fairly substantial six eight nine commission up front that essentially can do more or more than nine percentidden and essentially is a rapper around mutual funds, equities, bonds, whatever you want to put in there that you can go out and purchase from a broker. That is that

a fair assessment. Annuities are a lot of different things. Annuities are a contract of some type that is very complicated, almost always that are almost never really understood by the consumer, even though they often think they understand them, and they're

almost always sold on a misleading basis. When I say that, when you actually take the contract and go through it with the customer and and then call the insurance the number that's associated with the contract, where you get a service person, not salesperson, and you say not does this mean this? Or does it mean that? And then they tell you what it really means. The customer is almost always appalled, and they in that regard I say, they're

always almost always sold on a misleading basis. So you know, the sales guy will say something like, well where else can you get us guaranteed six percent return? Except for that's going to be a return of their cap will not a return of not an income return. It's not a return like we think of in the investing world. It's a return of their capital, which anybody can do for themselves just by taking their principle, putting it wherever

they want, and taking x percent of it out. On that basis, you can have a thirty return until you run out of money. You just return your capital, right, So so what about invested in nothing and have a percent return? One of the more interesting aspects of the change in fiduciary rules, which is UM at this point, I assume everybody knows, but on the off case that we're not, people aren't as tracking this as closely as

we are. Uh. The last administration changed the rule for governing retirement plans and that could include four oh one ks and four three b s and I risen things like that and said that the advisor has to treat the client UM has to operate in the client's best interest, which the current administration is not sure they want to

continue that rule. But since the fiduciary rule chains were announced, many of the big insurance insurance companies that underwrite annuities have seen their sales fall off a cliff, especially with people who service four own case and four three b s. So what what is your view of the fiduciary rule and what that might mean for for annuity sales. I think it's a stupid rule with great intent when you actually look at the devil in details. Devil in the

details is that it's largely fraudulent in that. Uh, you get the vice exemption best interest contract exemption, which has some specific wording that you're allowed to kind of bury in a big complicated contract. So the customer, you know, it's like sign here, signed there. Uh, you know, I got your best interests at heart, but the government makes me have you do all this paperwork. So a cleaner, simpler best interest client and the sentence would have been

better a be there's no governmental enforcement of this. What's, however, zero. The only company compliance enforcing these sort of things, whether the insurance I doubt that they'll even know, they haven't known in the past. Thirdly, uh, the only enforcement is a claimate's lawyer. This is a This is set up for PIABA, the Public Investor's Arbitration Bar Association, of which I don't have a problem with PIABA, but the reality

is it is the only enforcement arm of this. There is no part where the government comes in at any point in time and says you company X have violated the fiduciary standard. Therefore, and therefore we are doing something to you that doesn't happen under this law. This law, in my opinion, toothless Yes, well, no, no, I wouldn't go that far. It's kind of like it's got a rotted tooth dangling out the side of an otherwise empty mouth, and that rotted tooth is the is the claimate's bar.

When this was announced, we saw a ton of motion from everyone from Bank America, Mery Lynch down to small one person's shops and having to adjust to the change in advisories because I don't think they actually understand. I think you'll which you'll see if it goes forward, is them moving that way at first and then slowly backsliding into what they've traditionally done, which is to do a

word that's otherwise profane on the radio to their customers. Okay, I'm sure that that won't make it through the sensors, But let me ask you one more things backwardly, I mean, people have done things backwardly forever. Get these sensors to lighten up a little bit. So what do you do when a new prospective client comes to Fisher Investments and you're looking at their portfolio and you say, what is this, Oh, that's an annuity I bought some years ago. Are you

just stuck with that? Or can you work your way out of that without it being an egregious problem for the investor. Again, an annuity is a specific contract, so

they're not a blanket rule. You can say, but all annuities but blanket ruletor can say is that we have our people who are specialized in this, So we'll look at that contract to take the customer and call the number associated with that, go through it with the clients so they really understand what the contract is, and if they want to get out, we will pay the fee that's the penalty fee to get them out under certain circumstances, which they then amortize rolling forward against their costs of

being a client with us, and the I think we're the only people in the world to do that. What we do is perfectly legal, and it's legal in all fifty stage. Well, there's a lot of annuity sales people that don't think it should be legal. We actually get questions periodically from UH state insurance commissioners that don't actually understand what we do, and they say, how can you be doing this? Know? How can how can? We don't say things like that to them, but they say, you know,

how can you be doing this in our state? And then we explain it to them and then they say okay, Um, but they don't out at first because they don't really know what we're doing. And until they know what they're doing, why why wouldn't they want to ask? And uh? Then Um. The reality is that, as I said earlier, it is almost never true that these people customers really understand what the annuity contract does correctly, and they're almost always appalled

when they truly find out. And while there are exceptions to that, they're rare and um, and I'm delighted for the exceptions, but almost always, whatever it was they thought they were going to do with the annuity, there's a better way to do by owning principal underlying securities. Let's do that a different way. Fundamentally, what the insurance company does is takes the money, invest in a bunch of securities with a lot of fees put on top, and

somehow you're supposed to get this magical, spectacular return. Well, if that's the case, why aren't these the greatest active managers in the world, and why haven't they actually come to take all of the business to pass. It does away from all the passive people because they're so great at doing this stuff that they can put these complicated, big fees on doing the same things that other people would do. The fact is that's all nonsense. The fact

of the matter is they buy principle underlying securities. The people can accomplish the same end result if done correctly with principal underlying security, and have it be much cheaper. I'm very rid Halts. You're listening to Masters in Business on Bloomberg Radio. My special guest today is Ken Fisher. He is an author, raconteur, preserver of redwood forests, and perhaps most famously, a well regarded stock picker. Tell us about the process that you use to select stocks. It's

called lousy. Um. I'm not really a good stock picker, so I thought of as a stock picker in some ways, but I'm really not. What I'm good at doing is sort of like somebody that goes fishing, and I figure out a good pond of fishing, as opposed to act actually being good at getting the fish specifically. So if you can pick the right pond to fishing, it helps a lot. That's half the battle, isn't it. Uh So I would describe myself as a top down guy, not a bottom up guy. And most of the world kind

of sees itself at bottom up. Explain the difference between the two four people who may not be uh insiders understanding that. So the way the way I would start looking at the world is I would say I'm managing against this part of the world here and get geographically or BBSMP five could be the world could be, if could be what you picked the benchmark, and then I say it's made up of this stuff in these proportions.

And then I think these are the parts of the world in those proportions that would do better or worse. And I'm gonna want to overweight here and underweight there, and that would be both by things like geography, but also things like sector and things like size and things

like valuation. I'm not a constant guy to want to be a value guy or a constant guy to want to be a growth guy, because sometimes the one does better and the others on smalltock to better, big stock to better, sometimes foreign stocks to better, sometimes US stocks do better, on and on and on, and so I winnow that down and that leads me to what I was earlier kind of referring to as the ponds you

want to be in. And then I say, so, now I need to own if I'm going to be overweight to this and underweight to that and this and that, then I need to own, you know, five out of these seventeen. And then I'm going to look at those seventeen and I need to own three of these twenty and and that's where the stock picking comes. It's extracting. The actual stock picking is extracting those from the ones

that fit the criteria. But by the time you get down to selecting individual stocks, you've already made a number of decisions in terms of valuation, capitalization, location, sector, et ceteras, your allocation decisions. It's almost the individual stock is almost irrelevant, and not completely, but it's a it's it comes towards the end of the process, and then that decision comes to where I'm prepared to throw out some of the

baby with the bathwater. So I look at the at the at the at the universe of those and then I say, okay, I want to throw out the ones that have like funny accounting, because I always distrust funny. It's true, Uh that doesn't always mean that they're bad, but it means they're different, and I want the category. So if they do things, if they're weird for the category, I'm going to throw them out too. They might be exceptionally good, but I'm prepared to throw out exceptionally good.

Funny accounting always means increased risk of something untoward happen. But it's not just funny accounting. That's right, but it's not just that. It's also if it's in a sector, but it doesn't really seem like it's the sector, and it doesn't act like the sector. I want that quality, so so I throw a bunch out. And then I look among the others for what I call competitive advantages, and competitive advantages of things like low cost production, high

relative market share, uh superior distribution system. And then I look to see as the management awhere truly of their relative competitive position, and are they doing things to try to maximize that? And I am a fan of uh Mr Buffett's line that you know when and I'm not sure that I'm paraphrasing him perfectly, but that when a bad management meets a great business model or vice versa, it's a management reputation. It's likely to change, not the

business great. Great businessmen don't usually turn allousy business into a great one. It could happen, but it's not the usual thing. And lousy businessmen don't usually destroy a great business model. Um, it does happen, but it's not the usual. Usually, if lousy businessmen become the head of a great business model, they've become seen as great soon. Um And uh so I'm really looking for those attributes. And then it finally comes the valuation feature. Last. I've never been a believer

that valuations are predictive of much of anything. Uh And there's a time and fact where I want high valuations because that's the time where people are paying up for equality, for perception. That that's the ninth nineties verses the nineteen seventies at last year, okay, and last year. Well, I use the nineties as an example. Expensive stocks became more expensive and you had great returns. In the seventies stocks were cheap and they got a whole lot cheaper. So

so a standard thing that happens. You know, one of the things that's important in thinking about the market in general is you know, people say, and it's not true that markets hate uncertainty. What markets hate is rising uncertainty. Markets like high levels of uncertainty that are falling. If you've got high levels of uncertainty that are falling, you're moving to lower levels of uncertainty, and markets like that

a lot. So when that happens, and you give me it for instance, on that, I have to wrap my head around that. When when do we have high levels of uncertainty for a falling Last year, it's a perfect example. At the beginning of the year, you've got sixteen Republicans running for president. Nobody knows who's gonna nomine you're gonna be. You've got five people running on the Democratic side. Most people think Hillary Clinton will be the nominee. Then you

don't know which one of those will win. You got a Brickxit out coming up. Nobody knows what will happen, but it scared people a lot. There was a lot of the beginning of the year with the correction that occurred, a lot of fears about China implosion. You go on and on with uncertain the beginning of last year. By the time you get to the end of last year, all that's gone away. We got a winner, well, but you have that the political uncertain who goes away, but

you still have completely but it falls, it falls. Isn't the way completely? When Mr Trump gets elected, we still have but it's less than we had before. Is there going to be a trade war? Is there gonna be the what's gonna happen to the dollar? Are we going

to have still in a process of falling uncertainty? And I don't want to get into, you know, fighting about right now, but but we've gone through a period of falling uncertainty and we're going to continue this year into more falling uncertainty, and that's why we have a bull market. But in that as you have falling uncertainty, you typically extend forecasts further out into the future. And as you extend those forecasts further out of the future, people become

more growth oriented. Huh, that's interesting. Let's let's let me shift gears you a little bit. We keep reading that private companies want to stay private for longer, and if you look at the universe, at least in the US of number of public companies. There were seven thousand companies that were publicly traded twenty years ago. Now that's down to four thousand. The joke is the Wilshire five thousand is now I think thirty seven hundreds something like that.

What does this mean for the process of stock selection? What does this mean? What does this say about the environment publicly traded companies find themselves in? Well, I think the tour are somewhat separate issues. The thinking of it from the public company's viewpoint. Uh Sarbanes Oxley increased the costs for small companies going public. The I p O market is not been buoyant because, you know, in the John Templeton phraseology, bowl markets are born on pessimism, growing skepticism,

ature and optimism and die of euphoria. And we clearly have had a very long bowl market. That's been what I've referred to for a long time is the most joyless bowl market in history, because we haven't had those multiple years of very high end That's a great phrase. The most joyless bowl market I've been calling Jos, I've been calling it the most hated bowl market. But joy less is a different components. It's clearly been a bowl market.

It's clearly been long, and it's been joyless. And what that means is we haven't gotten to the exuberance part. And it's usually in that optimism transitioning to exuberance that you get high levels of I p O. You know, in my book, I wrote a lot about how I p O means it's probably overpriced. And the fact of the matter is that I p O s are done at the pricing benefit of the company. A'ssure not pricing benefit of the consumers. And so in the process of

this we haven't really gotten to that phase. Regulatory costs are higher because of our bins Oxley. The public has become in the aftermath of two thousand seven nine, often critical of things that relate to public companies in terms of attacking people. People don't like to in management executives. People don't like to be attacked. Uh, And so you say,

why do I want to do that? And then there's actually lots of what are thought of as alternative lending practices now that allow people to borrow money at what to Again, going back to my point about the traditional Alfred Martial concept of economic marginality, has been marginalized. The fact is paying up a little bit in the private market for loan market is actually cheap compared to equity

capital today on an after tax basis. So you know, going back to the so called infamous Fed model and forget about the treasury rate, but think about corporate rates and think about tax rates and adjust them. It's actually much cheaper and better for the company on average, unless you're thought of as a very low quality company to

be borrowing money rather than issuing stock. So staying private seems to be a rational decision because why why do the other If people want to find your works, where, where's best place for them to go to read about some of your views, commentary and everything. Well, hey, I still write a monthly column as they have for four

years at Financial Times, and you can go to their website. Uh, my older stuff is you know, all on Forbes still uh I uh, right around in other places, and I'm hoping to find a new home post Forbes in America for things that aren't the Financial Times. I love the Financial Times. It's a great publication and I encourage anybody to read the Financial Times because it really is the

global business newspaper. It's the Global business newspaper. And if you don't think global in this era, you're actually parking up the wrong tree. I just want to take a second ago off on a tangent America lad the market for years and years now, and I believe that this is the year where foreign takes over in US lags and that that accelerates in the back half of this year. And I might be wrong about that, but it will happen at some point if I'm wrong about it now.

And the folks that and I don't have a problem with passiveness, but the folks that are passive with us only better be prepared than to be in a three four year period where they're not actually getting what they think of is as well as the other stuff. And if in fact you want to be passive, you have to come to a self searching argument. When that moment occurs, do you switch to a passive vehicle that gives you

more foreign exposure? And if you do that, is that a passive decision or is that an active decision using passive vehicles both? You know, if I'm doing this off the top of my head by memory, but I want to say the ten year return for the SMP is about and the ten year return for take Europe is flat, and that assumes dividends reinvesting. I don't know if we've had that big a gap for that long period. Yes we have, we have, But let me just say that in the long term, and this is so basic that

people can't get it. In the long term, pricing controlled by shifts in the supply of securities, not demand. Demand doesn't fluctuate by as big a bandwidth the supply can, because supply is created a destroyed by shifts and paper product. And if you've got the right economics and a little bit of regulatory costs, you can overwhelm any level of demand. And in the long term you will. In the short

term you won't. And in that uh, in the long term it is axiomatical with a very long history that shows that US and form returns end up eventually in the same place. They just do it in wildly varying cycles, and one leads for a long time, then the other catches up, then the other takes over, and it is axiomatic that eventually foreign catches up with US, and so

then you can debate when. But the point is that the passive investor that's gone US only has to be prepared for long periods where US under So if you're a passive investor, you would advocate being a global Yes, I believe that in this era if you do not, no matter what your tactics are going to be, if you don't think globally, you know there's quite a lot. I don't have any political arguments, but the politics, I mean I study politics about how many political arguments that

I'm passionate about in terms of making. But the populism movement is a nationalistic movement wherever it exists. But that doesn't mean you shouldn't also be thinking global at the same time. Makes sense. We have been speaking with Ken Fisher. He is the co c I O and executive chairman of Fisher Investments. Be sure and stick around for a podcast extras where we keep the tape rolling and continue

to talk about all things investing. Check out my daily column on Bloomberg View dot com or you can follow me on Twitter at rit Halts. I'm Barry Rihults. You're listening to Masters in Business on Bloomberg Radio. What could your future hold? More than you think? Because at Merrill Lynch we work with you to create a strategy built around your priorities. Visit mL dot com and learn more

about Mery Lynch. An affiliated Bank of America, Mary Lynch makes available products and services offered by Merrill Lynch Pierce Federan Smith, Incorporated, Register Broker Dealer. Remember s I PC Ken, Thank you so much for doing this. This is it's always fascinating to to speak with you, and my pleasure bearer is always fun to speak with you. And I, uh, there's so much stuff we didn't get to. I wanna.

I want to continue discussing for for people who are listening at home who either I have heard of Ken Fisher or have seen his advertisements on UM the internet. You're fairly ubiquitous. It's it's hard to google anything and not see you come up anything related to finance. We spend a lot of money advertising, do you We've been a lot of money doing a lot of things. People see our advertising. I told you that earlier, and they think of us in terms of adverting. They just don't

see all the rest of what we do. So what I find fascinating, But by most definitions, over the past thirty years thirty plus years, you've built what is essentially the largest r I A in in America by any standard other than a UM where Financial Engines is bigger, but in all other ways than just straight at u M, we're bigger than Financial Right and they're really a four mostly four one K provider there for a large defined contribution plans for very large You're you're a registered investment

advisory servicing PYE net worth individuals and institutions. How many clients do you guys have at this point and employees? That sounds like you figured out how to scale something that most other people are having a hard time scaling. Well, that's I'm unable to speak for most people. But we're

comfortable with the business we do. I mean, the fact of the matter is that we have a very low termination rate and basically we have happy clients, and we operate in lots of places, and uh, we're not I mean, we're as I've said often, we don't have any market share. I mean, we're bigger than others, but weren't any market share. We're a peanut. Eight billion dollars is not a lot of money in a world where there's you know, sixty

trillion dollars of suggestible assets. What's a couple of billion dollars. But that said, within the universe of advisory firms, you're essentially the largest. I'm fascinated. I'm fascinated by the business side of that and the steps you took when you took them to grow that business, because listen, the whole world of people in the in finance. This is what I think a lot of people don't understand. That guy got lucky, he was born on third base. That sort

of stuff. The universe exists as it as it exists at any given moment. You are looking at the world of finance at that time and said I think I'm gonna do this, this and this, and then thirty years later, oh look, we're running eighty billion dollars. That's an amazing process to me because everybody is essentially looking at or has access to look at the same things, but not everybody reaches the same conclusions and executes the same plan to go forward. And I'm just fascinated by how you've

accomplished what you've accomplished. It is called masters in business. After all. You know, as I told you the last time that I was here with you, I'm a youngest brother and My older brothers were by definition older, bigger, stronger. Both of them happened to be smarter. And I knew when I was a little kid that if I wanted something, I couldn't want what they wanted and take them head on. It just couldn't work, and so I had to try to be This is kind of the beginnings of me

being what some people might call contrarian. But I had to figure out either different things I wanted or going about getting them a different way. And that's been true for me all of my life. I've always had the little brother complex, and the little brother complex from the beginning has had me trying to figure out how I could get what I wanted in the face of superior competition. And there's an abundant amount of big guns out there

already to shoot. And so then I've also been prepared to operate by trial and error and trying this and it doesn't work. And you can do a huge amount of things on a small scale and testament and see if they work, and then if they work, do them on a bigger scale, and if they don't work, move on to the next one. And so you know, again, yesterday when I was here in Town. Investment News was giving me this award as one of their inaugural innovation winners.

And you know, we've just done a lot of things that people in our realm of endeavor always thought were stuff either you couldn't do or you shouldn't do, not that they were illegal. But you know, for example, you talk about our advertising, people in our realm of endeavor have never advertised the ways we do. We started off doing direct mail, and then we moved into direct email, and then we moved into Internet banners, and we just kept rolling in marketing tests over time, over a long

period of time. Mind you too, this has now been twenty years that we are still doing direct mail. Absolutely it's in effective. Yeah, we do it differently than we used to, and it's not as effective as it was at first, because when we were doing it at first, it was like going back to my fishing analogy. The first time that you you know, you cast your line into a clear pool and there's no fish that have been taken out of the pool at all. Your odds

are greater than after you've taken ten fish out. And so but yes, direct marketing works for us, and we know more about direct marketing, on the other hand, and we did when we started. Uh, you know, we're not maestros at this. I disagree. I think you're an evil marketing genius. I've described you that, not evil, but a brilliant. First of all, if we were competing direct head on with Procter and Gamble for their business, we would get our clock cleaned. But but you don't know anything about

selling toothpastes. Don't know. But I don't know anything about marketing compared to Procter and Gamble. That's my point. And and the fact of matters. Yes, I don't know anything about two days. I have used the stuff, but but occasionally, but it's every Saturday, whether you need it or not. I forget some santacas, I forget. But but but you have to admit your approach to marketing to individuals has

been wildly successful compared in the industry. What we thought for a long time was that there was no reason you couldn't do these kinds of things in our realm of endeavor that other people weren't. But we're doing in other realms of endeavor. And what I've tried to do a lot in my career is to do things that people were doing in other realms of endeavor that they weren't in this the forty act advisory world. And uh

so you know we were early in computerization. Uh. We have all kinds of service models that we use that other people don't do. Uh, we're very we've customized sales and ways that other people haven't give me. For instance, by the way, I love the annuity thing. How how you buy people out of their contracts? What do you do that you need in terms of service that other

people don't do. So we have a whole series of different types and different sizes of customized client only seminar and events to communicate to them how we're seeing things about various things. And that's because we've learned that different people receive information best differently. And so we have a huge we we we we have clients at over. We have over fifty seven thousand client event contacts a year where clients go to events and interact. This is not

These are not sales events. These are service events where clients go to these events of different types all around the English speaking world and a little bit in Germany and talk to our people. Some small events, some big events. We separate completely sales from service. So our sales people do no service. It's completely specialized. We're extreme and specialization of labor and we and we have been forever because I didn't want the salesperson to be able to do

post sales service. Because if the sales person um does the boom doggle on the sales person on the customer and and and and you know, lies and cheets and steals, and they do post sales service, they can keep it keep someone else. Second, we want a prophylactic protection at the point of client intake. And so at the point the contracts signed, the service people come in take over and start all over again, and they don't get commissions.

So they're sitting there seeing and the sales people know that. So the sales people are less prone to want to do the U. That makes sense, And you build in a structural oversight that's even separate from the compliance department, just your process has because it provides a prophylactic protection. Uh lie was. Our orientation in general is somewhat different, I think than most people because we push very hard what we consider to be needs based investing versus what

we see as goals based investing. And not a financial plan or no, no, no. What what I mean is an awful lot of people ask client questions like, so, what's your risk tolerance? And you know, I did work twenty years ago that they can't. It's it's whatever the market's doing the past half hour and now, yes, exactly if you don't understand that. But but I don't think

most of the world fully gets that that. It's a little like a boxing analogy, where most people haven't haven't been hitting the gut hard enough enough times the way a good boxer would know how they react when they get hitting the gut. The good boxer actually knows what is risk tolerance is to a gut punch, but the

average person doesn't. In the market gives you gut punches all the time, and so we focus on needs orientation and then adapting the service to whatever that recent thing is that's a gut punch to keep the customer going to what they need, and what they need is almost always a much longer time horizon than they think, because unlike prior generations, people are going to live longer than

they ever have before. They need to stretch their money much further than they ever have in the myopic view that says, when I'm sixty five, I need to get real conservative was perfectly fine in the days that to find benefit pension plans were first invented, and people live to be sixty five, retired and died at seventy. But now you're probably talking on average, and this is not what the actual royal tables say. This is what I'm

telling you. It probably happens on average thirty years. And that thirty years, yeah, because people's lives keep getting longer in their lives and even more complex. If you make it to seventy five, it means you didn't die as a teenager. You didn't die and childbirth, you didn't die. All these previous windows where whether these big demographic surges and the odds are you going to go another x years?

So ironically to that point, Berry, if you actually look at the survivors of the Donner Party, the survivors of the Donner Party, who by definition were tougher than the non survivors, lived to be really really old, all of them because they were just tough. And the fact is that longer living leads to longer living. But in this day and age, within that longer time period. We have all of these advances being made in medicine that push

our lives longer and longer. When I was young, when you were young, senior sports didn't exist when I was I just was reading about this ninety year old marathon, astonishing because in the old days, a guy got to be post retirement age and he sat in a chair and of course, and of course women didn't get to retirement age, didn't work, and that was just a different world.

And the world has shifted, and now your time horizon post retirement is so much longer, but people haven't emotionally learned to adapt to that and plan for that long time horizon. That needs to really say, the most brutal thing that I can do is run out on money when I'm really old, and your poverty is the most brutal thing that you could do to something. That is the biggest question that you hear from people not in their twenties and thirties who have a long enough time

horizon to save, but in their fifties. Hey, I'm concerned I'm going to run out of money when I'm fill in the blank. Well, you know, one of the problems we've always had in behavioralism is people don't save enough. And I'm not going to get on the soapbox about saving. People are what people are. But then when they get to be retirement age, whatever it is they have, they need to plan for a long time. And so if that's retirement agent they don't have the money, that means

they need to find another way to work. Uh and uh oh, I'm just gonna get money from this or that or the other, social security, what have you. Well, if you think you're going to rely on some dependency, you've made yourself a depend and and that's a tough go to. You know, people get these things wrong, but we have a long life. Young people. Young people ought to do age appropriate stuff. People always asked, not always has me. People often ask me, so, what kind of

advice would you give to an eighteen year old? And my view would be, well, if you're an eighteen year old guy, you know what I do. I chase girls. And if you're an eighteen year old girl, I'd worry about how the guys chase you. And I think that's age appropriate. And you know, it's better to be chasing girls when you're eighteen than chasing girls when you're a grandpa. That's for darn share. And uh. The fact of the matter is age appropriate activity is one that people have

a hard time scoping out correctly. But part of age appropriate activity is realizing that you're going to live to be much like long, much longer likely than you envision that you will. When I was young, I bought a term insurance policy, and then I outlived the need of the term insurance policy, and it sat in a drawer

for a long time. When I got to be post fifty, I went back and looked at it, and in the twenty five five years from fifty, the life expectancy of a fifty year old had I looked at the terms that went with it, and the life expectancy of the fifty year old had grown by seven years. In those twenty five years, more or less, I got almost a year for every three that I lived, added on to what the life expectancy of a fifty year old would be.

And that process isn't over yet. We're still extending life as we know it, and we're also making better quality of life later and so all of the features even for and again, we've got a lot of clients, we hear a lot of stories uh, widows and divorced people in older ages trying to figure out things like I'm eighty two and my spouse died, and now I want to move to be closer to where my grandchildren are, and how do I go about finding someplace where I

can be an active, healthy, eighty two year old because I am, Because they've never thought about that before, because they were living in the house they were living in. They weren't planning to move, they weren't planning to change. And activities in your eighties aren't something that anybody ever said in school, Oh, here's what you should do when you're in your eighties, because we don't have stuff like that. So I know I only have you for another fifteen

minutes or so, is that right? What time are we out of here? Twelve thirty one o'clock? As Charlie, I think we have to be out of twelve thirty. Um, So let me jump into my favorite questions. And there are a few I really wanna go over. God, you know, there's so many questions we did not get to. You're You're easy to talk to when we we you ask your question for both is good and he is good. On an interview, and I sucked the airspace out of

the interview. That's right now, you did, not twelve thirty. Alright, So I'm gonna I'm gonna go over my five favorite UM questions. Tell us about your early mentors. Who are the people who influenced the way you looked at the world. Ah, well, of course with almost everyone, my mother and my father. Uh and your father especially was a famous author and uh yeah, But when I was very young, he was a father and he was actually marvelous in weird ways.

He was a weird man. He was on you. When I say weird, I mean out the bell curve, and he was. He was weird. I don't mean weird as bad, I mean weird. And he was statistically unusual. He had Asperger's before Aspergers was understood. And on the other hand, he was as marvelous bedtime storyteller. And I didn't understand at the time that in the bedtime stories he was telling me, he was telling me what he wanted me to be. Um. I still choke up when I think

about him what he wanted me to be. When I grew up, he was telling me in these fictional stories that he made up, what he wanted of me. Was he making these stories up, like right off the top of his head. I don't know that. I never knew if he was making him up off the top of his head or if he pre planned them. Uh. And they were different every night. Sometimes he told me the same stories over and over again because because because those were the ones he really wanted to drill into my head.

And then also my grandfather was terribly important to me. I one died before I was born, and if christ didn't know him, but my paternal grandfather and I were very close and I idolized him and he was He was a big influence on my life in other ways, in ways of what's good, what's bad, what do you do? How do you do things? Uh? He was an important role model to me. He was in a lot of ways.

There was a guy named Clarence Bennett after after my grandfather died that became a kind of a substitute grandfather for me. He was a former New York life insurance guy and he was also a great tree explorer and a great and a great explorer. Um he discovered the

largest and oldest Western juniper in the world. Still famous tree that Bennett juniper, and uh, he kind of became a very famous tree when when when I became older and I got involved in trees, and all my tree buddies knew that I had known Clarence Bennett when I was young. They were like, whoa, um anyway, um, Now, by the way, I have to just stop you and ask. So when you say when I became a tree guy,

let's let's dig into that. You you have committed to advancing the world's understanding of redwood forest and the ecology they represent. You endowed at Humboldt State University the Ken Fisher Redwood Forest Ecology Chair. So that's how you, Bennett, is what led you to your interest in redwood forest. No, I was already interested in being in the way. When I could, I could hop over my parents back fence and be out in the woods when I was a little boy, and I just loved being in the woods,

and I loved everything about it. And I already loved that. But Clarence Bennett had a huge impact on me. He lived not that far away and I could. I worked for him when I was a little kid. I mean I picked fruit for him and I tended his vegetable gardens and he was retired by then, and uh and he was a great guy and uh and uh and he's influenced me a huge But then I went to forestry school at Humble State, and then I decided that would be a lousy career, but I maintained it might

love r us And yes, I've done that. But I also, you know, have finance research and Douglas for uh uh western spruce, uh western red cedar through Japokata. And I'm big on what you would view as the ecology of big and tall and old tree species, on the code discoverer of the single oldest known uh um uh sequoias and provirons extent in the world. What do you wi is this in Redwood National Park? What do you make of the pushback against and through pogenic global warming? And

what's going on with e p A today. It looks like we're seeing a big shift at the government level versus the past eight years. I don't really get into all that stuff very much. I can tell you this, which nobody wants to believe, um, but I know it's true because I've been fundamental to to again most most big, most big, tall and old western tree science in recent years has been done under my large house, and uh, we've done the only long term project on the health

of redwoods in relation to climate change. And they don't give a rats darn. They they just blow off whatever climate does that. I don't mean in the short term

they necessary. You're talking about over thousands. They are so adaptive compared to other species that they know how to wiggle and give and move to gain competitive advantage against other tree species, and trees sort of invest in this versus that at a point in time, and they know they're more adaptive, Like a simperviruns is a hex eployd. It's got a much more complex chromosome makeup than other tree species and it just knows how to take advantage

of the circumstance to it no matter what the circumstances are. Well, you drop a nuclear bomb on if that's not going to be the climate climate, not whether climate climate. So if it's appreciably cooler or possibly warmer, you get drought,

you get heavy rain, you get warmer, you get colder. Now, mind you, that's again shy of like some catastrophe, an ice age, normal climate that would include the incremental changes that we talk about when we talk about climate change, I'm not again talking about you know, some some huge asteroid from outer space. It's the world. You know something even an ice age when you have glaciers coming south off the North Pole. Uh, that that's a once. I don't know how how many terms of anything that would

happen for our grandchildren's lifetimes. Redwoods in terms of nature, Uh, not only redwoods. Douglas firs are more adaptive than people ever thought. Western red cedars more adaptive than people ever thought. These trees got to where they are because of that feature through lots of stuff in the past. And in fact, redwoods are gaining relative share in forests, to within their landscape, to other tree species. In warming climates, redwoods gaining market share.

Redwoods dominate. So let's talk about you mentioned mentors. What investors influenced your approach to to invest in well, in a textbook sense, you know, the standards of the past. I mean, you know, people like Um Buffett Um, but people like Graham Um, my father, John Templeton personally, I was a big Templeton fan. I mean he was just a marvelous human being. Uh it seems fascinated. Oh no, he was a great guy. He was he was his spirituality.

His spirituality led him to a form of int a calmness that's rare, uh in that he would make investment decisions without the emotion that so many other people had because he was more at peace with himself than most people are. That's interesting. And and of course, as we all know, most people's emotion as their worst enemy when it comes to investing. Uh. You might deal with that this way, and you might deal with that that way. But he was a very at peace human being. And

uh so those would be uh the main ones. And uh, you know then that's a good run that for Oh, no, no, you know, I don't have anything unique. Um, you mentioned textbooks. Let's let's talk about books. This is the question people ask more than anything else. What are some of your favorite books? Well, my alternate favorite book is Hunting with Bow and Arrow by Saxton Pope. Pope was a friend of my grandfather's and was the father of modern bow hunting.

And I had different impacts on me because a lot of other things that I like in life are sort like hunting. Uh. And when I was young, I actually was very interested in be hunting. I did be hunting when I was young. Um. But I also am a big fan of an old book by a guy named Frank Hibbin called Hunting American Lions, which is another book about chasing stuff, because ultimately, investing is a different form of chasing stuff. It's a metaphor. I read it over

and over and over again. Um. Oh yeah, and you know what it's also both of those books are really good for grandchildren. Um and uh. Then I like, um, and you're not going to find this surprising. An old book by guy named Edgar Cherry called uh Redwood and California Forests, And there's only thirty seven known copies in the world, and I owned three of them. And I'm a big fan of that book. But you can you can get you can get reproductions of it on Amazon.

So you can't get the original. No, no, you know, if you find one, I probably catch you ten grand But um, but if you find one, let me know what all by it. I'd corner the market in that book. Um uh. And then you know, when investing books, it's pretty much just the old standards and all the old standards. When I was young, you know, I pretty much read all of them. That I could get my hands on, ranging from you know, all of the standard names that

you know, there's none, none of the standards. Give us give us one or two plus your plus your dad of course, Intelligion Investors, Security Analysis by Graham, those two classic gram book, my father's book, you know, Common Stocks and in Common Profits, which you know is still a great book. You have to take up any of those books like that and kind of adapt them in your mind for all of the modern technology. Uh, intuitively that's people kind of forget that sometimes when they read that stuff.

Those guys wrote those things without My father operated in a world with a hand crank adding machine and a pencil, right, uh, and difference then we have a different world. But the principles largely apply. If you extract away, how would you have done things then with a pencil versus today with

the computer, Um would be the same. But for example, I was always a big fan of of Jerald Lobes books, which a lot of people always decried and and and I think Jerald Lobe actually had a bigger impact on me. My father knew Gerald Lobe pretty well, and he did not like Jerald Lobe. But Jerald Lobe was actually Uh. Interesting in the Jerald Lobe brought understanding to commonplace investors that they did not have before he appeared on the on the on the horizon. He was in some ways

sort of a Jim Cramer of his day. And uh, and there's a valuable function in that. The battle for investment survivals is the I couldn't pull. That's his iconic And then and then and then of course, oh and I'm having Uh I used Google. I cheated because I was having that same moment. There were all of the Adam Smith books. And then uh, there's all of the the Great Crash. Uh. And then there's the Hilbrunner books. What are the Hilbrunner books, all the economic ones, Robert

Howe Brunner. Uh. And then of course then forgetting about those, you know, must reads are How to Lie with Statistics by Darryl Hoff Suh. I mean, if if hey, I encourage anybody ever to always take the what I always considered the core education classes, you know, which include stat core economics. Uh, you know, you're a calculus I mean, if you don't understand, if you don't understand marginality, calculus will get you to or you understand marginality called Kyle Brunner.

The one book I know is The Worldly Philosophers, that's one of his classics. And the Making of Economic Society. So that's what I was gonna about to say, teaching, um, the essential Adam Smith, Marxism, for and Against the Making of economic society, the Nature and Logic of Capitalism. He has a run of great The Human proSP Behind the Veil of Economics, Visions of the Future, the Debt and the Deficit Force Alarms, and he's got a huge run of books, Five Economic Challenges. I didn't realize he was

that so prolific. Uh. And then uh, um, if you can find Angus Black's two books, Angus Black is really Roger Lee roy Miller. Um. But Angus Black's two books, Radical Guide Economic Reality and The Radical Guide to Environmental Reality. Uh, they're actually classics. They're hard to find today. Um. But Roger Lee roy Miller is the great economic textbook writer. Uh. And I mean I think he the Devil's Covin. No, that's a different Angus Black, one less Radical Guide Economic

Reality and Radicals Guide to Environmental Reality. Angus Black. Yep, it does a pen name that he made Uh. He was a universe Chicago PhD from the sixties. Uh, was a very good communicator. He's still around, he still exists, he's well, he's older now. Guide to economic well better than the alternately. Yeah, absolutely, A radicals guide to economic reality of radicals. Guide to self destruction, a radicals guide. So those are the two big ones, self destruction and economics.

I heard a lecture by him once when I was young, and in an hour, he moved me along quite a lot in one hour because he was he was a great communicator. Uh. I mean I studied a lot of economics by the time I heard him, and he was kind of like watching all the moving parts work together. Suddenly you see the engine working. It just clicks. Yeah. No, he's a great communicator. Um and uh. And you know you asked me these questions, and there's so much that I forget about because it's been a long time. I

warned people, these are the questions that require recall. Well, you know, the older you get, the more I worry about do I have dementia? And uh And that started around fifty. But I used to have an encyclopedic memory of album names, songs, and now I can't remember I left the encyclopedia. It's just it's just so, my wife likes to say. Well, at a certain point, your head gets filled up with enough facts that if you want to enter a new one, you gotta lose an old one.

So UM, let me get to my last few questions before they come kick us out of here. Let's talk about what you do to keep mentally and physically fit? And what do you do what makes you think that I mentally and physically fit? Well, we were just talking about de mansia. What what do you do to stay entertained? What do you do to relax outside of the office other than go to the forest? Uh? Well, I do spend as much time as I can in the woods. I do try to take care of myself physically. I

am UM. When I was very young, I get captured by this female and I've been a prisoner to her ever since. Uh, and I UM like to spend time with her grandchildren. Uh. They're the most marvelous human beings that I've ever known. And I that's They're a prime form of relaxation for me. And uh, although most people don't think of children is relaxing. Almost every game, almost every grandparent does, and most of them are misled in that regard because I do. And um they're they're just wrong.

And uh the the you know, there's these age old features. I mean, how in the world these children that you have that don't know a darned thing, that grow up and then have these most miraculous children. It's like somehow jeans just get a generation. And um so I, Uh, I am a very heavy diet fan. I I used to weigh a lot. I used to a hundred pounds more than our way and I while I was younger then, and I worked very hard hundred pounds less than I was I was younger to that. Do we just trade? Yeah?

I think so. I think I won the trade. Um I I so, I spend a fair effort trying to. I've got a very bizarre diet and I focus on my weight a lot. And when you say bizarre diet, what what makes you diet bizarre? Well, the greatest principle because I when I wait a lot more, I was prone to overeat a lot of things. My definition is that I try not to everat anything I like. That's a lot of discipline there. So you only eat things you don't really care for. No, that's not true. I

try to only eat things I don't care for. When you travel, you get stuck with stuff. That's the worst part. Traveling is the toughest. But when I'm at home, I only eat stuff I don't like. Oh, I'm basically a vegetable and fruit guy. And then for I eat a handful of walnuts every day at home, and then I have to drink some milk for calcium. And I also, you know, a minuteing vitamins and all that kind of nonsense. But stay with the let's skip the vitamins unless you

really do radical calcium pills? Are you doing? Like when you get older? When you get older, you're gonna worry about Austina. You're not that much older than me. I'm gonna tell you, I'm not that far away. I don't know how old you are, Berry, I know how old I am. That's the key thing is knowing yourself. I'm sixty six. I was gonna say mid sixties, the most early sixties, and I'd like to live in this thirty years and have that be a good life. And so

it's spent a lot of time taking care myself. The old joke. It's not the years, it's the miles. That's the like. I'd like to have both. I'd like to have years and miles and uh so again, I walk a lot. On average, I walk about twenty miles a week. I love this thing, even though it's annoying, because it gives me a baseline of how much I'm walking around. And they want you to do ten thousand steps a

day and I'm pretty consistently doing fifteen thousand. I think the typing is probably sets it off a little bit. Maybe I'm cheating a little bit. I take it off as the equivalent when when we were young, when they when they actually had phone books and you let your fingers through the walking white. But it's every now and then. I'll there days when young people don't know about phone books. No they don't they I told people about the post office.

People don't understand about you know, you could be able to go to this building and give them a letter and they would send it somewhere like what do you mean a letter like t or people don't understand how it It's amazing to watch the transition, and we've spent enough time watching the next generation come in that we learned how to use computers. We've adapted to them. Computers are just part of the background. There's always been computers

to them, so it's a very different interaction. To me, it's this is still a thing of joy and wonder. To them, it just what do you mean it's a computer. There's that's supposed to be mobile, right, Well, the piece of glass that you carry around with you is a computer to them. But to us it's a music. Yeah, And to them it's just part of the background. All right. Before they throw us out, let me get to my last speaking. Think of what you think of how my

great grandfather would have thought about life. If my grandfather could have told him about truly what he would see by the time he died in the nineteen fifties, my great grandfather would have thought that my grandfather was out of his gourd. And now just from the fifties to today, it's ten x's. Although my grandfather's generation saw more relative change, that's ute change, that's right. They went from They went from late industrial to late electronic, early electronic too late electronic,

to early computers. My grandfather was born in seventy five, before the Industrial Revolution, took hold and the industal revolutions eighties thing in America, and so the steam engine is really a thing of his youth in terms of mass

in America. That transition to go to there, to radio, to telephones, to television, to airplanes, to actually know that computers existed, not that the computers would exist like we have them now, but that they existed in the way IBM and would have had them in as opposed to. So let me share something fascinating with you about airplanes.

We were talking about the other day in the office about bad news and good news, and one of the examples that I used of good news, my head of research, Mike Batnick, did this whole thing about all this good news on the chart, and most of the good news that came out you would never have thought twice about over the past decade because it's just a tiny little thing. And you know what, even when the iPhone first came out, no one really paid much attention to how big a

deal is it? But think about flight and think about nineteen o three Kitty Hawk. Now that North Carolina has one, uh the n c A A. It's it's so I'll tie it into recent news. There were no newspaper articles. It never made the New York Times. They flew I want to say, a half dozen or a dozen times before the local whatever you want to call it, newspaper or newsletter or whatever, had it like a paragraph, mentioned a blurb. The Right Brothers managed to get their heavier

than aircraft to fly fifty yards. They've done it five or six times. Whoop do you do? And yet think of the impact of that. So even when you're in the midst of an incredible technological change, you may not even be aware of the significance of it. Forget centuries later, just a few decades later. It's it's I find that just fascinating it. I'm pretty sure that people like the Right Brothers couldn't have predicted exactly how it would go, but that they would have thought that it would have

been an important thing. This is significant. They would have known it was something that mattered. They wouldn't know exactly how all that well. I don't think anybody can forecast all those little wiggles with accuracy in the slightest, in the same way that you know. When I was listening to John Bogol yesterday, he was talking about with confidence that yes, for five years this wasn't working, but he was sure it was the right thing to do, and

that eventually if we could survive. But that wouldn't say that the thing was wrong. It just implied that if he couldn't survive, someone else would probably have to do it later, and that you'd have to be some crazy guy like he was to do that, which has always been true of anybody that was ever entrepreneurial about anything. Sure, you know, they're always kind of the wing, that crazy guy.

And and and you managed to do it before, you know, the right brothers probably didn't cash in a whole lot on flight um Bogel is one of the lucky people started young enough that forty years later. You know, the the other one that they awarded yesterday in the icon mode. I mean they had a bunch of us that were awarded in the innovator mode, and then they had these two that were awarded in the icon mode. And the

other was Chuck Schwab. And the same thing in a way was true with Schwab when he first started the five Well, when he first started it wasn't a discount brokerage firm, which first started as a standard little Brook firm, that he then got the idea for the discount after he started the firm, and then he went with that. And again in the early days, Schwab of course was laughed at in San Francisco where I was in my time.

I mean, I'm a young guy in the realm of endeavor at the time, and people laughed at Schwab in those days. And of course a lot of time people start businesses that don't work and fail. There's lots of failures for every success. And yet Schwab was a tremendous success and a continuous innovator. How old does Chuck Schuab these days, Uh, I don't know exactly, but he's uh late, very late seventies. I don't know exactly. You know, any

big could looked that up on Wickham. He's he's no longer than you don't see him as the face of the firm as much, but he you know, you've seen him around for a long long time. He had a huge impact as an innovator for a long time, which is how he became an icon. But again that again that this is this notion of the you know, the instant success. The instant success does not happen. Even Bill Gates and Microsoft took a long time, had a huge impact on the world, but it took a long time

before the world fully was doing that. Uh in scale seventy he is seventy nine years old. I was more or less right to the last two questions before they come throw us out of here. Uh So, millennial, a recent college graduate comes to you and says, I'm interested in getting into the world to finance. What sort of advice would you give them? Talk to people that are about five years older than you are, that have done it,

because they know more about it than I do. Older than them, people would have done it recently, So you're saying it's a young man's game, not a or young person's game. I know the course that they have to follow is different than the course that I had to follow once upon a time, because the world has evolved and the people that have done it recently understand that. So seek out young mentors for what I gotta do, and then simultaneously remember that it's a long run. It's

a long life. The people that think they're gonna hit big and you know, go retire in five years are barking up the wrong tree. Because that's not really the way the world works. You're in it for the wrong motivation if you think you're going to make If you're just in it to make money, you're doing the wrong thing. You know. I'm, as you said in the introduction, supposed to be something like the four richest person in America, and it was never about money for me. The money

is a result. It's not a consistent theme I hear from people who I interview. The reality is, if you're doing it for the money, you're not really doing it for the customers. And if you're doing it for something other than the customers, you're barking up the wrong tree. In the longer term, the the you mentioned how long it is. I love the expression the days are long, but the decades are short, and that that really yeah,

I really like that. I know know what I'm stealing that from, but I'm sure some reader will tell us. And and lastly, what is it that you know about the world of investing in markets that you wish you knew thirty five years ago when you were first getting your legs underneath you. Uh So, maybe this sounds strange to you, but I wish that I would have understood. And I don't know it's thirty five years ago, but twenty years ago, I wish that I would have understood

the course in the transition that would occur to journalism. Really, that's interesting because I think journalism has big impacts for good and for bad on sentiment in investing, no doubt, and that that world has morphed quite a lot in ways that I try to understand, but I'm not sure I fully do, and but I work out it a lot.

And um, the fact is that in an awful lot of what we see in journalism today, journalism has lost its way and forgotten the core principles of journalism, and so much of journalism today does not start the way it did when I study journalism in school, which is to lead with the five when, why and how? And from that lack in the lead, which was why it was always supposed to be other than the opinion page. Uh, I mean opinion opinion. The news stories are so to

lead with a five Disney age. Uh. Now so often you look at the news and you can't actually find early in the story anything but opinion, and it's, you know, thought to be. In journalism school, they teach you to be hard hitting journalists, and so the stories are hard hitting, but its opinion, and that creates a lot of shrill that becomes noise to people, and people have a hard time getting to the facts. They get impatient. And so

then you can parallel out with gallops. Uh now, uh, twenty five year history of tracking media credibility by the same standards and seeing media credibility fall, and as media credibility falls, not in a straight line but in an irregular line. Obviously facts and circumstances contribute and to tract from that, but as that has happened, it changes the impact of media on sentiment. And I wish I had understood that better because I spast time studying sentiment and

media twenty five years ago. But I never anticipated I mean, if you just look at worlds that you and I know, and what's happened to things like I was talking to Jim Cramer this morning and uh early, and he was recalling to my memory that when he started writing, he started writing for Smart Money, And then I thought about why I haven't thought about Smart Money magazine in a

long time. They haven't been around. Yeah, exactly, That's the point the world publication the world just you know, and you know, you guys here at Bloomberg bought Business Week for a dollar literally a dollar plus thirty eight million dollars worth a dead of memory is yeah. But you know, if you think about it, this whole world has had these features and you know, as we speak, time warners up for sale and uh, you know the world. You look at the transition and evolution of The New York Times,

which has been going downhill at an irregular pace. I mean, recently they've gotten a trump uptick. That's a huge uptick. Yeah, but it's a short term phenomena. The trend for that has been downhill for twenty years. And well, everything that's printed on pulp trees and and not digital has become uh dinosaur and his fading. Uh. And then with that, uh, you know, the nature of employment inside journalism has shifted.

I mean, Bloomberg is really quite an exception to the general It's a data services company with the media attached to it. And and and you know, so Thompson Reuters has a little bit of that too. Um. But the traditional core journalism world as it existed has shifted to where there's not enough compensation to justify heavy research. In

most places, the channels are more narrow uh, compensations constrained. Uh. And from that, you know, one should be neither hostile nor sympathetic to journalists one way or the other anymore than other category. But from that, the output has moved evermore to this principle of trying to gain short term attention to shrillness at the loss of longer term credibility, which then forces the investor to find ways to become

more self reliant. No doubt about that, you know, And that need to become self reliant alters the way we should think about sentiment. That's interesting. You know, you have some new formats coming out, like pro Publica or even The Guardian, which was basically turned into a giant trust um with its own funding as opposed to having to sell newspapers. They still sell newspapers, but they're now a self funded, freestanding entity. Same with Pro Publica. It's an

outside investment that allows them to be free standing. Who knows what's going to happen to the ft or the New York Times. I think the Wall Street Journal is stable, but is we move more towards indexing? Who knows? You know well. I was in London last week talking to John Redding and the CEO of the FT, and they seem to be pretty on top of No. No, I think, I think they're doing great. But they have learned likewise that they have to do a multiplicity of things and

that they have to adapt. And so there's the one part of the world that I think, you know people readily except, which is that they got to be strong in the online side. And then the other part that they've done very well is to build up their conference business. And there's actually a cyclically regular need increasingly for people to get together, because getting together is another form of increasing your credibility and what's going on, you know, World

War Ide, less trust media. If I get together with people and I hear stories and we swap information, I can gain greater sense of confidence in what I'm doing. So their conference business has been growing and I and and of course John in particular is a big fan of uh the importance of print being a piece of the puzzle, the puzzle because it provides tangibility. And so I don't see the pink, which is you know, the legendary name for the FT. I don't see the pink disappearing.

But it's thinner than it used to be, and it's done differently than it used to be, and that's necessary in this era. But more and more, you know, I just think of the world of local newspapers that used to exist, most of which has been completely wiped out, going away, going to digital. When you think about eBay replacing classified ads along with Gregg'slist, well you just took the heart of the financial business model away from it. We we could digress about this. I know they're literally

throwing us out of here in five minutes. Ken, thank you so much for being so generous with your time, Thanks for having me. And uh for those of you who are listening, Um, we have been speaking, still listening to us after all this time, we have been speaking with Ken Fisher of Fisher Investments. If you enjoy this conversation, be sure and look up an inch or down an inch on Apple iTunes and you can see any of the other hundred and forty three or so of these

conversations that that we have had. I would be remiss if I did not thank my head of research, Michael bat Nick, for helping put together some of the subjects and questions we discussed today along with Taylor Riggs, who is my producer booker. UM, I'm Barry Ridholtz. You're listening to Masters in Business on Bloomberg Radio. Our world is always moving, so with Mery Lynch you can get access to financial guidance online, in person, or through the Apple.

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