Scan barcode
gvenezia's review against another edition
3.0
Take a phrase that has already become widespread in 2020 due to the market crash and Covid-19 pandemic: we are living in a "new normal". Is it true? Only time will tell, but as Fisher shows, the "new normal" is rarely borne out. Exact copies of this phrase have been used by journalists for all the major crises one could recall. Case in point, Fishers piles up headlines from 2008's Great Recession, 2003's Tech Bubble / 9-11 Fallout, 1987's Black Monday, 1959's volatility, and the 1939's Great Depression fallout. In each case, journalists posited a fundamental shift in how markets function—shortly before markets had normal recoveries to bull markets. Fisher's key insight being that large downturns and recoveries are normal parts of the market cycle itself and don't portend radical departures into "new" normals.
Even more damning is Fisher's exposure of the new "new normal" pronouncements as the market starts the typical recovery. For example, from 2009 to 2011 journalists shifted focus from the "normal" secular bear market to seemingly unusual aspects of the recovery. Again Fisher shows that these headlines simply describe typical patterns of economic recovery. This contextualization of apocalyptic thinking is the primary value of Fisher's perspective. He has a great knowledge of and aptitude for using the history of financial journalism against itself. He continues this effective format for other headline grabbing topics like national debt, short-term vs. long-term market returns, volatility and risk, secular bear markets, and globalization. (A striking example to counter the fears of growing national debt: The UK carried debt above 100% of GDP (peaking above 250%!) for more than a century of healthy growth and economic dominance. Essentially, debt doesn't really matter for developed economies).
On the flip side, Fisher's journalism background results in writing that sometimes comes across as exaggerated, brazen, overly simplistic, repetitive, and focused on peculiar insights instead of consistent argument. No doubt many of these qualities are often the tokens of good journalism. In book form, however, they become tedious and detract from the stated purpose of the book, which is to show how people constantly forget the ways markets are consistent over time. These negative qualities can be seen in three major examples: Fisher's tangents, exaggerated attacks on investors' stupidity, and brazen statements about non-financial matters.
First, the only appendix materials Fisher includes is a few pages on how Baum's The Wizard of Oz is an allegory for the political fight over monetary policy in the 1890's. Interesting tidbit, no doubt, but how does it relate to the book's central theme of people forgetting how markets perform? Well, it doesn't. The appendix is referenced in the text as a reason for Kansas being important on the political stage in a discussion about the regional homes of presidents (which itself is marginally important to the book's thesis). Instead of this tangent, the appendix would've been better used for explaining cursory references to his other books and specific economic theories (like the quantity theory of money). And instead of the foray into election dynamics and regional differences, this chapter on politics would've better served the book's purpose by sticking to its preliminary discussion about political parties, presidents, and their historical (lack of) effect on average market returns.
Second, the content of the writing often picks out effigies to burn with comical putdowns. Talking heads are "chittering chimpanzees" (11). Market worriers are "Dumb Bears" (11). People forgetful of market history have "Swiss-cheese monkey memory" (3). Politics are "poly-tics"—i.e. many blood-sucking tics (Chapter 7). I generally just dislike this style of writing, but more to the point, this style may lead the reader to a false sense of superiority. Granted, people make poor decisions, but there are often evolutionary, psychological, and economic reasons for these decisions (See Howard Marks or Benjamin Graham for better treatment of these maladaptations). Explaining these reasons would lead to better investment decisions and empathetic conversations with others about investing (which makes others more likely to listen).
Finally, Fisher's overly simplistic dismissal of contrary views is revealed in his opinions on subject areas outside of economics, like climate change:
I'm not saying Fisher is obviously wrong, but the experts have been warning us about climate change's catalyzing effect on the intensity of natural disasters. And perhaps it it isn't a sizable increase, but natural disasters cause more loss of value now because we have more value to lose. On either point, a simple repetition of history doesn't seem immediately obvious and Fisher doesn't provide any evidence for this point. He does provide plenty of quotes and charts for financial events, but doesn't offer any specifically for natural disasters and their economic effects over time.
After a while I no longer enjoyed the book because of this style—it drags down the main point. I kept reading because Fisher's deployment of journalistic history still provides concrete insights for the investor who is seeing similar headlines in daily life. Even the giants of value investing don't use this kind of concrete evidence (more often, market psychology is discussed abstractly in terms of value fundamentals and principles). So this book is worth reading. Condensing it by half might even reveal a classic.
Even more damning is Fisher's exposure of the new "new normal" pronouncements as the market starts the typical recovery. For example, from 2009 to 2011 journalists shifted focus from the "normal" secular bear market to seemingly unusual aspects of the recovery. Again Fisher shows that these headlines simply describe typical patterns of economic recovery. This contextualization of apocalyptic thinking is the primary value of Fisher's perspective. He has a great knowledge of and aptitude for using the history of financial journalism against itself. He continues this effective format for other headline grabbing topics like national debt, short-term vs. long-term market returns, volatility and risk, secular bear markets, and globalization. (A striking example to counter the fears of growing national debt: The UK carried debt above 100% of GDP (peaking above 250%!) for more than a century of healthy growth and economic dominance. Essentially, debt doesn't really matter for developed economies).
On the flip side, Fisher's journalism background results in writing that sometimes comes across as exaggerated, brazen, overly simplistic, repetitive, and focused on peculiar insights instead of consistent argument. No doubt many of these qualities are often the tokens of good journalism. In book form, however, they become tedious and detract from the stated purpose of the book, which is to show how people constantly forget the ways markets are consistent over time. These negative qualities can be seen in three major examples: Fisher's tangents, exaggerated attacks on investors' stupidity, and brazen statements about non-financial matters.
First, the only appendix materials Fisher includes is a few pages on how Baum's The Wizard of Oz is an allegory for the political fight over monetary policy in the 1890's. Interesting tidbit, no doubt, but how does it relate to the book's central theme of people forgetting how markets perform? Well, it doesn't. The appendix is referenced in the text as a reason for Kansas being important on the political stage in a discussion about the regional homes of presidents (which itself is marginally important to the book's thesis). Instead of this tangent, the appendix would've been better used for explaining cursory references to his other books and specific economic theories (like the quantity theory of money). And instead of the foray into election dynamics and regional differences, this chapter on politics would've better served the book's purpose by sticking to its preliminary discussion about political parties, presidents, and their historical (lack of) effect on average market returns.
Second, the content of the writing often picks out effigies to burn with comical putdowns. Talking heads are "chittering chimpanzees" (11). Market worriers are "Dumb Bears" (11). People forgetful of market history have "Swiss-cheese monkey memory" (3). Politics are "poly-tics"—i.e. many blood-sucking tics (Chapter 7). I generally just dislike this style of writing, but more to the point, this style may lead the reader to a false sense of superiority. Granted, people make poor decisions, but there are often evolutionary, psychological, and economic reasons for these decisions (See Howard Marks or Benjamin Graham for better treatment of these maladaptations). Explaining these reasons would lead to better investment decisions and empathetic conversations with others about investing (which makes others more likely to listen).
Finally, Fisher's overly simplistic dismissal of contrary views is revealed in his opinions on subject areas outside of economics, like climate change:
Geopolitical tension is as old as mankind, as are war and even terror attacks. Natural disasters aren't new! And this idea that natural disasters are bigger, badder and more frequent now simply isn't true. Only human arrogance allows us to believe we're living in some new, unique age. (2)
I'm not saying Fisher is obviously wrong, but the experts have been warning us about climate change's catalyzing effect on the intensity of natural disasters. And perhaps it it isn't a sizable increase, but natural disasters cause more loss of value now because we have more value to lose. On either point, a simple repetition of history doesn't seem immediately obvious and Fisher doesn't provide any evidence for this point. He does provide plenty of quotes and charts for financial events, but doesn't offer any specifically for natural disasters and their economic effects over time.
After a while I no longer enjoyed the book because of this style—it drags down the main point. I kept reading because Fisher's deployment of journalistic history still provides concrete insights for the investor who is seeing similar headlines in daily life. Even the giants of value investing don't use this kind of concrete evidence (more often, market psychology is discussed abstractly in terms of value fundamentals and principles). So this book is worth reading. Condensing it by half might even reveal a classic.
More...