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Remember your history

Fisher: Forget the past at your own peril

052812 fisher
Heeding: Ken Fisher urges investors to incorporate history in their decisions.

Ken Fisher, founder of Fisher Investments, in his latest book urges people to remember history — especially financial history — when making investment decisions.

Mr. Fisher dropped by Pensions & Investments' New York office to discuss his latest book, “Markets Never Forget (But People Do): How Your Memory Is Costing You Money and Why This Time Isn't Different.”

The book is a critique of behavioral finance, which Mr. Fisher said overlooks the importance of memory and confirmation bias. Look no further than the headlines in the news today, Mr. Fisher said. Little of today's conversation about Greece notes that the country has a history of defaulting on its debts, he noted.

Meanwhile, people are worried about a possible Italian default, even though the country has no recent history of defaulting on its debts, Mr. Fisher said. Italy last defaulted on its debt in 1940 when it stopped paying Allied nations amid World War II hostilities.

He also compared how similar the S&L crisis was to the 2008-'09 financial crisis, and how the outcome of the S&L crisis was not a Japanese lost decade, which pundits claim will be the result of the recent crisis, but rather one of the greatest economic booms of the 20th century. Mr. Fisher said he's not arguing we will have another boom in the coming years, but pointed out the uncertainty of what's ahead.