Category: hubris

Ken Fisher lays an egg

Forbes columnist, best-selling author, billionaire, and self-proclaimed investment genius Ken Fisher watched his Purisma Total Return Fund (PURIX) drop 5.37% yesterday. His benchmark, the MSCI EAFE Index, lost 4.37%. Year-to-date, Purisma is -30.45% vs. -31.92% for EAFA. Such mediocre performance wouldn’t be noteworthy except that Fisher built an aggressive marketing machine which hyped his ability to protect investors from bear markets. The financial media has remained suspiciously silent, I suspect because Fisher’s massive ad budget swells their coffers.

Fisher also sticks out due to his cocky prognostications throughout this bear market:

Headlines herald a U.S. prime-time, subprime mortgage implosion leading to an upcoming credit-crunch crisis – destined to sink shares, raise interest rates and impale economies. But this is demonstrable nonsense… Fact is, subprime is a relatively small part of the overall debt market and the talk is much ado about little. And if I’m wrong about that? Then you get those widening spreads to warn you. And take cover fast. Until then, be bullish and enjoy watching the bears impale themselves. They are good at it.
~ article written for FT.com, July 17, 2007

As the Fisher sales literature says, “invest assured.”

What do Iraq, bubbles, Bush, Bernanke, and Obama all have in common?

Over-confidence and a strong belief in activist government, says Michael S. Rozeff in a blogpost on LewRockwell.com:

Xenakis, who wrote Generational Dynamics, in 2004 wrote this: “Ten years ago, all the major senior business, government and education leaders were risk-averse people from the generation that grew up during the Great Depression and World War II. Today, all the major leaders are from the risk-seeking, arrogant, hubristic, narcissistic, self-assured ‘baby boomer generation.'”

His hypothesis applies to the Iraq War instigators. And they are so hubristic they’d start a war with Iran.

It applies to Bush II, born in 1946, who thinks he can remake the world.

It applies to the credit bubble, which is a manifestation in part of lowered risk aversion. Those contracting big debts, both in the business world and out, didn’t think about the risks or factor them in to pricing. It applied earlier to the internet bubble.

These are history. My main point is that Bernanke, born in 1953, is in this group. He thinks that he can stem another Great Depression, if not with helicopter money, then with some other gimmick. He thinks he can manipulate the stock market and stem its decline. He cannot do either of these things. He’s overconfident.

Obama, born in 1961, is a Generation X-er. He’s just as overconfident as the Baby Boomers and will be just as activist, as he is not separated that far in time from them. But his agenda is a different set of “problems”, namely, social problems.

My comment: The younger generation is becoming increasing cynical about grandiose government plans for their lives (e.g. the Iraq War and the recent Fed counterfeiting binge). They will become more jaded and indignant as the failures of government intervention become even more glaring.

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