STREET DOGS: Five popular investment myths debunked
Ken Fisher from Learn It, Do It and Profit from it
Five popular myths that Ken Fisher debunks in his book, Debunkery: Learn It, Do It and Profit from it – Seeing Through Wall Street’s Money-Killing Myths: 1. Bonds are safer than stocks. People assume bonds circumvent short-term volatility because they are bought at fixed prices that investors will see when the bond matures. But Fisher shows how historically stocks have more positive periods that are bigger, than bonds. 2. Expect average returns. Tracing returns on the S&P 500 from December 31 1925, to December 31 2009, Fisher found that investors saw big returns 38.1% of the time, average returns 33.3% of the time and negative returns 28.6% of the time. 3. Lower price: earnings ratios (PEs) mean lower risk. Fisher references S&P 500’s PE at the end of 2008, which stood at 60.7, and pointed out that those who looked at the high PE as an indicator of risk and kept away lost out on a 27% increase in the US stock market. 4. Sell in May. Sell in May and go away is based on the belief tha...
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