Fisher Investments - 80% of investors are 100% stocks

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Fisher Investments - 80% of investors are 100% stocks

Post by ddb » Mon Jul 11, 2011 11:25 am

InvestmentNews Article

Of particular note from the article:
Sharyn Silverstein, 64, is entitled to out-of-pocket losses she incurred as a result of Fisher Investments liquidating her bond portfolio and investing 100 percent of the proceeds in stocks, according to a copy of the interim arbitration award obtained by Bloomberg News.
Fisher Investments manages more than $41 billion for almost 40,000 accounts, primarily for individual investors, according to its most recent regulatory filings available on the U.S. Securities and Exchange Commission website.

...

About 80 percent of Fisher's private clients are invested 100 percent in stocks, according to arbitration testimony from Fisher Vice Chairman Andrew Teufel described in the document. Teufel is a member of the five-person Investment Policy Committee at the firm, according to its website.
Although I've suspected such in the past (see this thread, which brought out some Fisher sock puppets), this is the first hard evidence I've seen that Fisher Investments pushes their investors into 100% equities across the board. Wow, 80% of their clients in all stocks - this is unconscionable!

I've read some of Ken Fisher's books, and I'll go so far as to say that I truly dislike the man, and I hope that lots of other investors who were unsuitably invested by his firm are able to get similar awards. I once signed up for one of his "free book" deals, and was HOUNDED by his sales team for YEARS, after repeatedly assuring them that I was comfortable managing my own portfolio.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

User avatar
Jay69
Posts: 1801
Joined: Thu Feb 17, 2011 9:42 pm

Post by Jay69 » Mon Jul 11, 2011 11:35 am

Does anybody else love the name of their software :wink:
When her assigned investment counselor with the firm drew up her recommended portfolio, using software called the “Suitability Wizard,”
"Out of clutter, find simplicity” Albert Einstein

Michael Baker
Posts: 195
Joined: Tue Jul 05, 2011 10:54 pm

Post by Michael Baker » Mon Jul 11, 2011 11:43 am

I read that article before you put it up. I am amazing that they have so many assets under management by proving such horrible service. When he was asked in an interview what he though about EM he said not yet but he likes mid cap us stocks. . . When asked about passive vs active he said he doesn't have a stance.

A lot of what he says is good but a lot isn't. I don't understand how his firm got so many AUM by operating the way that they have been.

User avatar
Jay69
Posts: 1801
Joined: Thu Feb 17, 2011 9:42 pm

Post by Jay69 » Mon Jul 11, 2011 11:51 am

Wonder what they did after 2008? Did they end up selling out at the low?
"Out of clutter, find simplicity” Albert Einstein

User avatar
nisiprius
Advisory Board
Posts: 39105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius » Mon Jul 11, 2011 11:58 am

I'm sure it's no different elsewhere.

There are all sorts of reasons for advisors to push stocks.

When stocks do well, they do real well and when your investments have earned 17% nobody is going to complain about fees.

Stocks are what the press reports, and so when your portfolio tanks you'll be hearing all sorts of stuff from the press that will help you believe it when the advisor says it's not his fault.

If your advisor puts you 100% in stocks and you do better than your work buddies, you can brag about it.. If it's 2008, you can "brag" about how badly you did, "yeah, it's a bitch ain't it."

But if your advisor has put you 50/50 in stocks and bonds, you can't brag going to "Boy was my advisor smart. He had me 50% in bonds and I only lost 25%."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Michael Baker
Posts: 195
Joined: Tue Jul 05, 2011 10:54 pm

Post by Michael Baker » Mon Jul 11, 2011 12:01 pm

This is the video that i quoted: http://www.bloomberg.com/video/71355018/

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Mon Jul 11, 2011 12:04 pm

nisiprius wrote:I'm sure it's no different elsewhere.

There are all sorts of reasons for advisors to push stocks.

When stocks do well, they do real well and when your investments have earned 17% nobody is going to complain about fees.

Stocks are what the press reports, and so when your portfolio tanks you'll be hearing all sorts of stuff from the press that will help you believe it when the advisor says it's not his fault.

If your advisor puts you 100% in stocks and you do better than your work buddies, you can brag about it.. If it's 2008, you can "brag" about how badly you did, "yeah, it's a bitch ain't it."

But if your advisor has put you 50/50 in stocks and bonds, you can't brag going to "Boy was my advisor smart. He had me 50% in bonds and I only lost 25%."
I disagree; I actually think that being overly conservative is in the advisor's best interest. Clients don't pull money because of underperformance during good times (i.e. S&P 500 returns 20%, client account goes up 12%), they pull money out when stocks tank and their accounts also tank by the same amount. Plus, this leads to more stable income for the advisory firm.
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Mon Jul 11, 2011 12:05 pm

Michael Baker wrote:I read that article before you put it up. I am amazing that they have so many assets under management by proving such horrible service. When he was asked in an interview what he though about EM he said not yet but he likes mid cap us stocks. . . When asked about passive vs active he said he doesn't have a stance.

A lot of what he says is good but a lot isn't. I don't understand how his firm got so many AUM by operating the way that they have been.
Yes, exactly. I scanned one of his books a few years back, and was completely shocked by the low ratio of substance:words. I literally had no idea what he was trying to say.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

Michael Baker
Posts: 195
Joined: Tue Jul 05, 2011 10:54 pm

Post by Michael Baker » Mon Jul 11, 2011 12:06 pm

ddb wrote:
nisiprius wrote:I'm sure it's no different elsewhere.

There are all sorts of reasons for advisors to push stocks.

When stocks do well, they do real well and when your investments have earned 17% nobody is going to complain about fees.

Stocks are what the press reports, and so when your portfolio tanks you'll be hearing all sorts of stuff from the press that will help you believe it when the advisor says it's not his fault.

If your advisor puts you 100% in stocks and you do better than your work buddies, you can brag about it.. If it's 2008, you can "brag" about how badly you did, "yeah, it's a bitch ain't it."

But if your advisor has put you 50/50 in stocks and bonds, you can't brag going to "Boy was my advisor smart. He had me 50% in bonds and I only lost 25%."
I disagree; I actually think that being overly conservative is in the advisor's best interest. Clients don't pull money because of underperformance during good times (i.e. S&P 500 returns 20%, client account goes up 12%), they pull money out when stocks tank and their accounts also tank by the same amount. Plus, this leads to more stable income for the advisory firm.
Most advisors that i know received the majority of their new clients during down markets.

yobria
Posts: 5978
Joined: Mon Feb 19, 2007 11:58 pm
Location: SF CA USA

Post by yobria » Mon Jul 11, 2011 12:23 pm

nisiprius wrote:I'm sure it's no different elsewhere.
Depends on what's selling at the moment. Read the posts at the financial advisor message boards over the past two years, you'll see bonds are the name of the (cold calling) game.

Same as investment companies pushing tech stock funds circa 2000.

Nick

Michael Baker
Posts: 195
Joined: Tue Jul 05, 2011 10:54 pm

Post by Michael Baker » Mon Jul 11, 2011 12:26 pm

yobria wrote:
nisiprius wrote:I'm sure it's no different elsewhere.
Depends on what's selling at the moment. Read the posts at the financial advisor message boards over the past two years, you'll see bonds are the name of the (cold calling) game.

Same as investment companies pushing tech stock funds circa 2000.

Nick
where are the financial advisor message boards that you are referring to?

User avatar
SVariance1
Posts: 1259
Joined: Mon Jun 20, 2011 11:27 am
Location: Philadelphia Area

Post by SVariance1 » Mon Jul 11, 2011 12:33 pm

nisiprius wrote:I'm sure it's no different elsewhere.

There are all sorts of reasons for advisors to push stocks.

When stocks do well, they do real well and when your investments have earned 17% nobody is going to complain about fees.

Stocks are what the press reports, and so when your portfolio tanks you'll be hearing all sorts of stuff from the press that will help you believe it when the advisor says it's not his fault.

If your advisor puts you 100% in stocks and you do better than your work buddies, you can brag about it.. If it's 2008, you can "brag" about how badly you did, "yeah, it's a bitch ain't it."

But if your advisor has put you 50/50 in stocks and bonds, you can't brag going to "Boy was my advisor smart. He had me 50% in bonds and I only lost 25%."
Hopefully advisors put clients in an all equity portfolio based on their time horizon, risk tolerance, etc. Dishonest advisors might put clients in equity portfolios because the fees are higher. (if actively managed)
Mike

User avatar
SpringMan
Posts: 5409
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Post by SpringMan » Mon Jul 11, 2011 12:48 pm

Michael Baker wrote:
yobria wrote:
nisiprius wrote:I'm sure it's no different elsewhere.
Depends on what's selling at the moment. Read the posts at the financial advisor message boards over the past two years, you'll see bonds are the name of the (cold calling) game.

Same as investment companies pushing tech stock funds circa 2000.

Nick
where are the financial advisor message boards that you are referring to?
I think this is the forum that was being referred to.
http://forums.registeredrep.com/
Best Wishes, SpringMan

yobria
Posts: 5978
Joined: Mon Feb 19, 2007 11:58 pm
Location: SF CA USA

Post by yobria » Mon Jul 11, 2011 12:57 pm

SpringMan wrote: I think this is the forum that was being referred to.
http://forums.registeredrep.com/
Yeah thanks I forgot the URL!

Nick

User avatar
Random Musings
Posts: 5466
Joined: Thu Feb 22, 2007 4:24 pm
Location: Pennsylvania

Post by Random Musings » Mon Jul 11, 2011 1:06 pm

100% equities makes rebalancing easier.

Always thought it was a scummy organization. Perhaps their motto should be "it's always fun to play with other people's money".

RM

User avatar
nisiprius
Advisory Board
Posts: 39105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius » Mon Jul 11, 2011 1:14 pm

yobria wrote:
nisiprius wrote:I'm sure it's no different elsewhere.
Depends on what's selling at the moment. Read the posts at the financial advisor message boards over the past two years, you'll see bonds are the name of the (cold calling) game.

Same as investment companies pushing tech stock funds circa 2000.

Nick
I stand corrected.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

mwm158
Posts: 475
Joined: Sat Jun 25, 2011 6:55 pm

Post by mwm158 » Mon Jul 11, 2011 1:28 pm

deleted
Last edited by mwm158 on Wed Jan 07, 2015 9:15 pm, edited 1 time in total.

User avatar
Mel Lindauer
Moderator
Posts: 29806
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Post by Mel Lindauer » Mon Jul 11, 2011 1:32 pm

Unbelievable and unconscionable.
Best Regards - Mel | | Semper Fi

btenny
Posts: 5123
Joined: Sun Oct 07, 2007 6:47 pm

Post by btenny » Mon Jul 11, 2011 1:36 pm

I remember interviewing Fisher and Company back in 1999 when I was looking for an advisor. I did not pick them and since have fired the advisor I did select. Self direction is much better.

I found the Fisher guys to be great salemen who knew almost nothing about investing. I was shocked at how poor the "local guys" were at talking about investing or knowing the details of the stock and bond markets. They let the "home office" do all the stock picking and all the investment allocations and so forth. Everyone is in the dark out in the trenches. Plus everyone said that they "used special software programs" to select stocks and that Fisher himself did much of the final stock selecting. And they do not (or did not at that time) use mutual funds so that also turned me off completely. So basically everything was black magic, not a good way to invest.

I basically concluded Fisher Inc was a bunch of salesmen that rode on Fishers' Dads reputation for investing and that Fisher Jr was a bloated book writer who has really lousy returns. But they have a great marketing engine. They still send me a folder and advertisements 2-3 times per year.

Bill

dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Post by dhodson » Mon Jul 11, 2011 2:27 pm

mwm158 wrote:Would she be complaining if the market jumped 36%? She is the one that signed the paperwork to do this. Where is the personal responsability?
if the advisor had said to the client like the following:

typically putting everything in equity is considered excessively risky and you could lose a lot of money or gain a lot of money, but after talking to you i got the impression you want me to take high risks. can you please confirm this?

then we wouldnt be having this discussion. instead it appears from the article that they raised several objections.

i think they tried to take on some responsibility but instead were given very poor advice.

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Mon Jul 11, 2011 3:04 pm

mwm158 wrote:Would she be complaining if the market jumped 36%? She is the one that signed the paperwork to do this. Where is the personal responsability?
I am typically an advocate of the "buyer beware" approach, but the Fisher mantra of 100% stocks seems egregious. Much like automobile repairs, portfolio management is an area where very few consumers have the ability to make an informed decision on who to hire and how much to pay.

Unlike auto repair shops, though, Registered Investment Adviser (RIA) firms have a legal duty to serve as a fiduciary, i.e. to act in the best interest of the client. By choosing this business model, a RIA has chosen to accept the liability that comes along with potentially recommending inappropriate investments to its customers.

I'd really love to see whatever "tool" Fisher Investments uses to gauge suitability and risk tolerance.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

User avatar
House Blend
Posts: 4606
Joined: Fri May 04, 2007 1:02 pm

Post by House Blend » Mon Jul 11, 2011 3:37 pm

Fisher Investments Inc., the firm run by Forbes magazine columnist Kenneth Fisher, may have to pay damages of $376,075 for breaching its fiduciary duty to a retired investor.
Why on earth would Forbes give this guy a platform for making sales pitches? I don't read Forbes, so I don't know if they have any standards, or journalistic integrity.

Also, it seems like you could still reap plenty of commissions and fees from a 60/40 portfolio instead of 100/0--trade in and out between stocks and bonds instead of just among stocks. And it would be a lot easier to defend yourself against this kind of lawsuit.

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Mon Jul 11, 2011 3:42 pm

House Blend wrote:
Fisher Investments Inc., the firm run by Forbes magazine columnist Kenneth Fisher, may have to pay damages of $376,075 for breaching its fiduciary duty to a retired investor.
Why on earth would Forbes give this guy a platform for making sales pitches? I don't read Forbes, so I don't know if they have any standards, or journalistic integrity.

Also, it seems like you could still reap plenty of commissions and fees from a 60/40 portfolio instead of 100/0--trade in and out between stocks and bonds instead of just among stocks. And it would be a lot easier to defend yourself against this kind of lawsuit.
Fully agree. Going 100% stocks is bad for the firm and the clients - makes no sense.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

Lauren Vignec
Posts: 260
Joined: Sat Feb 16, 2008 9:34 am

Post by Lauren Vignec » Mon Jul 11, 2011 4:00 pm

ddb wrote:
House Blend wrote:
Fisher Investments Inc., the firm run by Forbes magazine columnist Kenneth Fisher, may have to pay damages of $376,075 for breaching its fiduciary duty to a retired investor.
Why on earth would Forbes give this guy a platform for making sales pitches? I don't read Forbes, so I don't know if they have any standards, or journalistic integrity.

Also, it seems like you could still reap plenty of commissions and fees from a 60/40 portfolio instead of 100/0--trade in and out between stocks and bonds instead of just among stocks. And it would be a lot easier to defend yourself against this kind of lawsuit.
Fully agree. Going 100% stocks is bad for the firm and the clients - makes no sense.

- DDB
The most sensible explanation is that he truly believes stocks are a safe investment as long as you don't sell when markets go down. I know beyond any reasonable doubt that Fisher claims that stocks are safer (his word) than bonds long-term.

This belief is frighteningly common among financial professionals generally, and it isn't something they believe out of self-interest. They actually believe it, and they believe it in the sense that they think those who disagree have some sort of moral failing.

Michael Baker
Posts: 195
Joined: Tue Jul 05, 2011 10:54 pm

Post by Michael Baker » Mon Jul 11, 2011 4:07 pm

Lauren Vignec wrote:
ddb wrote:
House Blend wrote:
Fisher Investments Inc., the firm run by Forbes magazine columnist Kenneth Fisher, may have to pay damages of $376,075 for breaching its fiduciary duty to a retired investor.
Why on earth would Forbes give this guy a platform for making sales pitches? I don't read Forbes, so I don't know if they have any standards, or journalistic integrity.

Also, it seems like you could still reap plenty of commissions and fees from a 60/40 portfolio instead of 100/0--trade in and out between stocks and bonds instead of just among stocks. And it would be a lot easier to defend yourself against this kind of lawsuit.
Fully agree. Going 100% stocks is bad for the firm and the clients - makes no sense.

- DDB
The most sensible explanation is that he truly believes stocks are a safe investment as long as you don't sell when markets go down. I know beyond any reasonable doubt that Fisher claims that stocks are safer (his word) than bonds long-term.

This belief is frighteningly common among financial professionals generally, and it isn't something they believe out of self-interest. They actually believe it, and they believe it in the sense that they think those who disagree have some sort of moral failing.
And he is a billionaire, just another sign that this industry has a lot that needs to be improved.

User avatar
dnaumov
Posts: 495
Joined: Tue Jul 27, 2010 6:04 pm
Location: Finland
Contact:

Post by dnaumov » Mon Jul 11, 2011 4:28 pm

Lauren Vignec wrote:
ddb wrote:
House Blend wrote:
Fisher Investments Inc., the firm run by Forbes magazine columnist Kenneth Fisher, may have to pay damages of $376,075 for breaching its fiduciary duty to a retired investor.
Why on earth would Forbes give this guy a platform for making sales pitches? I don't read Forbes, so I don't know if they have any standards, or journalistic integrity.

Also, it seems like you could still reap plenty of commissions and fees from a 60/40 portfolio instead of 100/0--trade in and out between stocks and bonds instead of just among stocks. And it would be a lot easier to defend yourself against this kind of lawsuit.
Fully agree. Going 100% stocks is bad for the firm and the clients - makes no sense.

- DDB
The most sensible explanation is that he truly believes stocks are a safe investment as long as you don't sell when markets go down. I know beyond any reasonable doubt that Fisher claims that stocks are safer (his word) than bonds long-term.

This belief is frighteningly common among financial professionals generally, and it isn't something they believe out of self-interest. They actually believe it, and they believe it in the sense that they think those who disagree have some sort of moral failing.
But it's absolutely true. Over the course of 50, 100, 200 years, stocks completely slaughter bonds in returns and they will continue to do so. The problem is, this "long term" might be a lot longer than some investors would like it to be.

yobria
Posts: 5978
Joined: Mon Feb 19, 2007 11:58 pm
Location: SF CA USA

Post by yobria » Mon Jul 11, 2011 4:46 pm

Lauren Vignec wrote:The most sensible explanation is that he truly believes stocks are a safe investment as long as you don't sell when markets go down. I know beyond any reasonable doubt that Fisher claims that stocks are safer (his word) than bonds long-term.

This belief is frighteningly common among financial professionals generally, and it isn't something they believe out of self-interest. They actually believe it, and they believe it in the sense that they think those who disagree have some sort of moral failing.
Hmmmm....The alternative explanation would be: 100% stocks maximizes expected returns, and thus expected future AUM fees (and expected bragging rights) if it "works".

On the 80% chance stocks do well, can you imagine the ads? "Fisher - a 10% return!", or "Fisher beats 99% of asset allocation funds".

The problem is, 20% chance it doesn't work out, and your clients end up ruined.

Nick

DP
Posts: 659
Joined: Thu Apr 17, 2008 5:19 pm

Post by DP » Mon Jul 11, 2011 5:01 pm

Hi,
Just another market timing guru. He made a very timely call turning from bearish to bullish in July 2002: http://www.cxoadvisory.com/individual-gurus/ken-fisher/

After that he has been consistently bullish throughout the last bear market and up until this year when he turned neutral. His claim to fame is probably his regular column in Forbes. I've heard he is worth more than $1B so I guess I underestimated the potential rewards from writing a magazine column. I'm assuming that is how most of his subscribers found him.

Don

Fallible
Posts: 6999
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Post by Fallible » Mon Jul 11, 2011 5:50 pm

This may be a bit naive, but should ANYBODY (except maybe the ultra-, ultra- rich) be in equities 100%?

staythecourse
Posts: 6993
Joined: Mon Jan 03, 2011 9:40 am

Post by staythecourse » Mon Jul 11, 2011 6:14 pm

The late Harry Browne correctly adviced one should put as few people between you and your money as possible.

In investing I live by Fox Mulder: "Trust No One".

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Lauren Vignec
Posts: 260
Joined: Sat Feb 16, 2008 9:34 am

Post by Lauren Vignec » Mon Jul 11, 2011 6:18 pm

dnaumov wrote: But it's absolutely true. Over the course of 50, 100, 200 years, stocks completely slaughter bonds in returns and they will continue to do so. The problem is, this "long term" might be a lot longer than some investors would like it to be.
Hello Dnaumov,

Even if it were true that stocks were guaranteed to beat bonds over the next 50 years, stocks still wouldn't be "safer" than bonds over the course of those 50 years. Not in the way that any regular human being I've met uses the word "safe". And it is not a guarantee that stocks will beat bonds anyway, although it is very likely over long time periods.

Leesbro63
Posts: 5937
Joined: Mon Nov 08, 2010 4:36 pm

Post by Leesbro63 » Mon Jul 11, 2011 7:10 pm

I can't comment on Fisher, but some of this conversation reminds me of my experience as client of Ron Muhlenkamp (actually it was my father's account, but I was the contact person and it was my idea...before I knew what I know now). To Ron's credit, I believe he is totally honest and means well. But, (this was 1997) at least before he got creamed in 2008, his whole mentality was that he was buying individual companies. And he did beat the S&P for many years like the Bill Miller of Legg Mason. So his stock picking was good for a long time until it wasn't (also like Miller).

He never looked at it as being 100% in one asset class, but that, indeed, was what it was. Sadly for his clients (who he used to say could safely spend 5% per year...he never called it an SWR however), they lost 2/3 of their nest eggs from the peak of 2007 to the trough of 2009 and still are only at half of what they had at peak. At least based on performance of the publicly traded MUHLENKAMP FUND which he says is invested similarly to his private account clients. It was all an illusion as the "laws of financial planning" that we discuss here crashed his misunderstanding of being "safe" by "buying well-researched, good companies".

User avatar
SVariance1
Posts: 1259
Joined: Mon Jun 20, 2011 11:27 am
Location: Philadelphia Area

Post by SVariance1 » Mon Jul 11, 2011 7:15 pm

Fallible wrote:This may be a bit naive, but should ANYBODY (except maybe the ultra-, ultra- rich) be in equities 100%?
Yes as long as they are expected to go up :wink: Seriously, my answer is yes but it depends on a variety of factors with the most important one being risk tolerance.
Mike

Uninvested
Posts: 657
Joined: Sun Mar 13, 2011 2:21 pm

Post by Uninvested » Mon Jul 11, 2011 7:32 pm

Fisher is a stock investor, not a bond investor. You give him what you want in stocks. You shouldn't give him all your money.

User avatar
nisiprius
Advisory Board
Posts: 39105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius » Mon Jul 11, 2011 9:13 pm

Darn, edited the post when I meant to make a new one. (I said something about the "cult of equities," quoted Glassman and Hassett as claiming Siegel said stocks are safer than bonds, and quote Peter Lynch's 1995 article saying if you followed the strategy he suggested in his book, you'd never own a bond or a bond fund and you'd stay 100% invested in stocks at all times. Then I complained about charts showing the risk of stocks apparently declining with time. Don't have time to reconstruct it. Google's cache is failing with a circular reference!)
Last edited by nisiprius on Tue Jul 12, 2011 8:24 am, edited 5 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

lawman3966
Posts: 1152
Joined: Sun Aug 10, 2008 12:09 pm
Location: Tacoma WA

Post by lawman3966 » Tue Jul 12, 2011 12:42 am

Uninvested wrote:Fisher is a stock investor, not a bond investor. You give him what you want in stocks. You shouldn't give him all your money.
A few issues here. Do you have any data indicating that Fisher's stock picks have outperformed a pertinent stock index over an extended period of time (I'm thinking 20 years+ to be meaningful).

Separately, turning to the "fisher is for stocks" remarks, the article does not say that Fisher mishandled the stock portion of her portfolio, but rather that he mishandled her portfolio as a whole.

Unless his materials say otherwise, I have to believe that his allocation is intended to be for an entire portfolio. Would anyone really pay Fisher to invest in stocks, and hire a completely separate advising entity to handle their bonds funds? Rebalancing would certainly be a chore. I simply don't believe this is his approach at all.

Certainly, the people he's had call me over the least year have said nothing about investing only my equity capital with him.

DP
Posts: 659
Joined: Thu Apr 17, 2008 5:19 pm

Post by DP » Tue Jul 12, 2011 12:56 am

Hi,
I very much agree with Nispirius last post questioning the cult of equity.

Regarding Fisher investments, they used to call me but I would bust their chops about Fisher's bullishness throughout the decline of the bear market ... and they stopped calling.

Don

User avatar
fredflinstone
Posts: 2143
Joined: Mon Mar 29, 2010 7:35 am
Location: Bedrock

Post by fredflinstone » Tue Jul 12, 2011 3:40 am

nisiprius wrote:And then, there are all those graphs which make my angry because they fooled me. I saw them in trusted places, such as TIAA literature and Burton Malkiel's Random Walk, and I trusted not only the data but also the interpretation: stocks become less risky over time, the range of returns narrow, loss becomes impossible, and the return becomes almost a sure thing...
OK, nisiprius, I was with you until the last paragraph of your post. Why is the traditional interpretation of those charts incorrect? Isn't it true that "stocks become less risky over time" and that "the range of returns narrow"? Isn't it also true that stocks held over a long period of time (say, 20 years or more) are highly likely to provide a positive return? I realize, of course, that there are counter-examples, like Japan 1990-present, but those are outliers aren't they?

User avatar
SVariance1
Posts: 1259
Joined: Mon Jun 20, 2011 11:27 am
Location: Philadelphia Area

Post by SVariance1 » Tue Jul 12, 2011 4:59 am

fredflinstone wrote:
nisiprius wrote:And then, there are all those graphs which make my angry because they fooled me. I saw them in trusted places, such as TIAA literature and Burton Malkiel's Random Walk, and I trusted not only the data but also the interpretation: stocks become less risky over time, the range of returns narrow, loss becomes impossible, and the return becomes almost a sure thing...
OK, nisiprius, I was with you until the last paragraph of your post. Why is the traditional interpretation of those charts incorrect? Isn't it true that "stocks become less risky over time" and that "the range of returns narrow"? Isn't it also true that stocks held over a long period of time (say, 20 years or more) are highly likely to provide a positive return? I realize, of course, that there are counter-examples, like Japan 1990-present, but those are outliers aren't they?
One of the problems that I see with data like this is that it ignores the human element of investing. Who achieved these returns? The index. As many of us know, unfortunately, the flow of money into equity funds does not escalate during weak periods . It is just the opposite.
Mike

User avatar
sperry8
Posts: 1829
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Post by sperry8 » Tue Jul 12, 2011 6:23 am

Jay69 wrote:Wonder what they did after 2008? Did they end up selling out at the low?
I was with Fisher during this time, he did not sell out at the low. Nor did he call the low. He was bullish the whole time. I left Fisher a few months ago. They said although they missed this last bear market, they called the previous 3 - and if they could correctly call (i.e., time) the 3 out of the next 4 bear markets I would be wise to stay with them. I left anyway (since I don't believe he can do it).
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

CTBob
Posts: 103
Joined: Fri Nov 13, 2009 8:18 am
Location: Connecticut

Re: Fisher Investments - 80% of investors are 100% stocks

Post by CTBob » Tue Jul 12, 2011 6:24 am

ddb wrote: I once signed up for one of his "free book" deals, and was HOUNDED by his sales team for YEARS, after repeatedly assuring them that I was comfortable managing my own portfolio.
Me too - years of phone calls and junk mail.

User avatar
FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

Post by FabLab » Tue Jul 12, 2011 7:06 am

To me, Fisher is just another huckster to be ignored. When I receive his mailings, albeit attractively packaged I might say, they are processed as such:

1) pages that identify me or my family --> shred
2) all other materials quickly off to the recycle bin

I expect I can keep this up just as long as he can continue to send the tripe my way. Of course, in my dotage if I start to lose the marbles, all bets are off :D
The fundamental things apply as time goes by -- Herman Hupfeld

Uninvested
Posts: 657
Joined: Sun Mar 13, 2011 2:21 pm

Post by Uninvested » Tue Jul 12, 2011 7:42 am

lawman3966 wrote:
Uninvested wrote:Fisher is a stock investor, not a bond investor. You give him what you want in stocks. You shouldn't give him all your money.
A few issues here. Do you have any data indicating that Fisher's stock picks have outperformed a pertinent stock index over an extended period of time (I'm thinking 20 years+ to be meaningful).

Separately, turning to the "fisher is for stocks" remarks, the article does not say that Fisher mishandled the stock portion of her portfolio, but rather that he mishandled her portfolio as a whole.

Unless his materials say otherwise, I have to believe that his allocation is intended to be for an entire portfolio. Would anyone really pay Fisher to invest in stocks, and hire a completely separate advising entity to handle their bonds funds? Rebalancing would certainly be a chore. I simply don't believe this is his approach at all.

Certainly, the people he's had call me over the least year have said nothing about investing only my equity capital with him.
I am not sure. I read him all the time in Forbes and the only thing ever discussed is Stocks. Why would anybody give him money to invest in bonds? But to the other question: I have no idea what his long term record is and I don't care for 2 reasons: I wouldn't believe what he showed me. 2. The past has NO relationship to the future.

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Tue Jul 12, 2011 7:54 am

fredflinstone wrote:
nisiprius wrote:And then, there are all those graphs which make my angry because they fooled me. I saw them in trusted places, such as TIAA literature and Burton Malkiel's Random Walk, and I trusted not only the data but also the interpretation: stocks become less risky over time, the range of returns narrow, loss becomes impossible, and the return becomes almost a sure thing...
OK, nisiprius, I was with you until the last paragraph of your post. Why is the traditional interpretation of those charts incorrect? Isn't it true that "stocks become less risky over time" and that "the range of returns narrow"? Isn't it also true that stocks held over a long period of time (say, 20 years or more) are highly likely to provide a positive return? I realize, of course, that there are counter-examples, like Japan 1990-present, but those are outliers aren't they?
Re: "stocks become less risky over time", the truthfulness of this statement depends on your definition of risk. If risk = loss of principal, then yes, stocks become less risky over time, based on recent historical data. If risk = standard deviation of monthly returns, then stocks do not become less risky over time.

Re: "the range of [stock] returns narrow", this is true if speaking about annual returns, and very untrue if talking about cumulative returns.

In other words "stocks become less risky over time" is true under certain narrowly-defined terms. The problem with the charts like the one Nisi shows, IMO, is that there is often not nearly enough disclaimer language, and the typical reader will walk away feeling overly-optimistic about the future of stocks.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

User avatar
TomatoTomahto
Posts: 9318
Joined: Mon Apr 11, 2011 1:48 pm

Re: Fisher Investments - 80% of investors are 100% stocks

Post by TomatoTomahto » Tue Jul 12, 2011 8:00 am

CTBob wrote:
ddb wrote: I once signed up for one of his "free book" deals, and was HOUNDED by his sales team for YEARS, after repeatedly assuring them that I was comfortable managing my own portfolio.
Me too - years of phone calls and junk mail.
Me also, but they also sent me a pair of binoculars... I guess to show how well they could see into the future :lol:

They just called me again a couple of days ago. They always make it sound as though they're getting back to me after I called them, which I never have.

User avatar
paulob
Posts: 1408
Joined: Tue Feb 20, 2007 7:54 am

Post by paulob » Tue Jul 12, 2011 8:15 am

For those posting about 100% equity and returns over the 20 year time periods, you need to read the linked story. The couple invested in 2007, were retiring in 2008 when they were going to begin withdrawing from the portfolio. Their previous allocation was 100% fixed income.

Arbitration is a wonderful process, but it would appear (from the information presented in the article) this firm needs to be sued and also investigated. Arbitration on a few cases will probably be just a business expense.
Paul

User avatar
nisiprius
Advisory Board
Posts: 39105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius » Tue Jul 12, 2011 8:20 am

It's hard to parse out the qualifiers, but charts like this give the impression of a narrowing range of outcomes and fairly predictable and loss-free future. The big problem is that it doesn't show the effect of compounding. When it comes to something like a 1% expense ratio, everyone is always quick to point out the effect of compounding. But when it comes to a huge difference like 7.94% versus 17.24%, suddenly, apparently, compounding is no big deal.
Image
Come on. The difference between 7.94% and 17.24% over 25 years is, I-can't-think-of-any-adjective-not-beginning with "f" huge.

It's a factor of 7.89!

And, it doesn't narrow with time!. Not when you compound it out, it doesn't.

Over 10, the difference is a factor of 5.18.
Over 15, 7.06.
Over 20, 7.56.
Over 25, 7.89.

And there are two other problems. The figures are not inflation-adjusted. If you throw that in, then you will see losses at 15 years. And, of course, they do not include taxes. With taxes, I'm certain you'll see a possibility of loss at 20 years, not sure about 25.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Tue Jul 12, 2011 8:30 am

paulob wrote:For those posting about 100% equity and returns over the 20 year time periods, you need to read the linked story. The couple invested in 2007, were retiring in 2008 when they were going to begin withdrawing from the portfolio. Their previous allocation was 100% fixed income.

Arbitration is a wonderful process, but it would appear (from the information presented in the article) this firm needs to be sued and also investigated. Arbitration on a few cases will probably be just a business expense.
Right, it seems difficult to imagine that this case was an isolated occurrence. I'd think any of Mr. Fisher's older investors who hear about this arbitration might consider lining up at the same attorney's office looking for an arbitration settlement of their own.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

RobertAlanK
Posts: 146
Joined: Mon Dec 28, 2009 4:31 pm

Post by RobertAlanK » Tue Jul 12, 2011 8:48 am

Judging by their 100% stock portfolio recommendations it appears that Fisher Investments follows the same marketing approach used by the major film studios - target the 18-25 year-old male. Except that it's certainly unlikely that they could have amassed $40B in AUM from that demographic.

But it does sound like they got the "loud and scary" part right, just like the typical summer blockbuster movie. :shock:

User avatar
Topic Author
ddb
Posts: 5509
Joined: Mon Feb 26, 2007 12:37 pm
Location: American Gardens Building, West 81st St.

Post by ddb » Tue Jul 12, 2011 8:53 am

RobertAlanK wrote:Judging by their 100% stock portfolio recommendations it appears that Fisher Investments follows the same marketing approach used by the major film studios - target the 18-25 year-old male. Except that it's certainly unlikely that they could have amassed $40B in AUM from that demographic.

But it does sound like they got the "loud and scary" part right, just like the typical summer blockbuster movie. :shock:
According to Fisher Investments' ADV Part I, they manage 38,521 accounts totaling $41.3 billion, for an account average size of just over $1 million. Definitely not made up of the 18-25 crowd :)

The notion that 80% of these accounts are invested 100% in equities is mind-boggling.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

Post Reply