Ken Fisher

Ken Fisher is a billionaire American investment analyst, financial columnist, and the founder and executive chairman of Fisher Investments, a major global money management firm. While often associated with growth investing, his iconoclastic and data-driven approach offers valuable lessons for all investors, including those who follow a value-based philosophy. Fisher is renowned for challenging Wall Street's conventional wisdom, a trait he shares with many great value thinkers. He rose to prominence through his long-running “Portfolio Strategy” column in Forbes magazine (1984-2017), making him one of its longest-serving columnists. He has also authored several best-selling books on investing, including “Super Stocks” and “The Only Three Questions That Count.” His work is characterized by rigorous historical market analysis, a contrarian spirit, and the creation of practical tools for evaluating stocks, most notably the Price-to-Sales Ratio.

Born in 1950, Ken Fisher is the son of the legendary investor Philip Fisher, another pioneer of growth investing. Despite his father's fame, Ken carved out his own distinct path. After studying forestry at Humboldt State University, he founded Fisher Investments in 1979 with just $250. He built the firm from the ground up, focusing on managing money for high-net-worth individuals and institutions. His public profile grew immensely through his prolific writing. His books and columns are known for their conversational style, using historical data and simple logic to debunk widely held market myths. Fisher’s core message is that the market is a forward-looking discounter of all known information, and to beat it, you must identify something the market has mispriced or a belief that is widely held but demonstrably false.

Fisher’s approach is systematic and disciplined, blending top-down analysis with a unique stock-selection framework.

In his book “The Only Three Questions That Count,” Fisher argues that an investor's edge comes from seeing the world differently. He advises constantly asking yourself:

• What do I believe that is false? This forces you to challenge your own assumptions and the prevailing market narrative. Answering this helps you avoid popular mistakes and herd mentality.
• What can I fathom that others find unfathomable? This is about finding your unique analytical advantage. It could be a deep understanding of a niche industry or the ability to see a long-term trend that others are dismissing.
• What is my brain doing to blindside me? This is a direct nod to behavioral finance. Fisher stresses the importance of recognizing our own cognitive biases—like overconfidence or confirmation bias—that can lead to poor decisions.

Fisher's most enduring contribution to financial analysis is popularizing the Price-to-Sales Ratio (PSR). He detailed its use in his first book, “Super Stocks” (1984). The PSR is calculated as: PSR = Company's Total Market Capitalization / Last 12 Months' Revenue Its primary advantage is its ability to value companies where the more common Price-to-Earnings (P/E) ratio is useless. This includes:

• Growth Companies: Young, rapidly growing firms that are reinvesting heavily and may not yet be profitable.
• Cyclical Companies: Businesses like automakers or industrial manufacturers whose earnings can swing dramatically from boom to bust.
• Turnaround Situations: Companies that have fallen on hard times and have temporarily negative earnings.

Fisher provided simple rules of thumb for using the PSR:

• Avoid stocks with a PSR greater than 1.5. He argued that very few companies can justify such a high valuation.
• Aggressively look for stocks with a PSR of 0.75 or less. Such low valuations can signal a bargain that the market has overlooked.
• Sell any “super company” if its PSR exceeds 3.0. For truly exceptional businesses, he allowed for a higher multiple, but even these had a selling point.

Unlike the pure bottom-up stock pickers like Benjamin Graham, Fisher employs a top-down approach. His firm's investment decisions are driven first by their global outlook (macroeconomics and politics), then by sector allocation (which sectors are likely to outperform), and only then by selecting individual stocks within those favored sectors. Fisher has long been a vocal advocate for global investing, arguing that limiting oneself to a single country's market is a form of “home country bias” that drastically reduces opportunities and increases risk.

So, is Ken Fisher a value investor? Not in the traditional sense. A “deep value” investor looks for stocks trading below their intrinsic worth, often using metrics like a low P/E ratio or a price below book value. Fisher, in contrast, is willing to pay a premium for high-quality companies with superior long-term growth prospects. However, his philosophy shares deep roots with the value investing mindset:

• Contrarianism: Both Fisher and value investors believe the greatest opportunities are found by going against the crowd.
• Discipline: His framework of the “Three Questions” and the PSR provides a disciplined, unemotional way to analyze investments.
• Research-Intensive: He emphasizes doing your own homework and basing decisions on data and logic, not on tips or market noise.

You could say Fisher sits at the crossroads of growth and value, much like the modern approach of Warren Buffett, who famously evolved from buying “fair companies at a great price” to buying “great companies at a fair price.”

• Think for Yourself: The most powerful tool you have is an independent mind. Challenge popular opinion and your own beliefs with data.
• Look Beyond Earnings: Don't be scared off by a company with no profits. Use the Price-to-Sales Ratio to find hidden gems in growth, cyclical, or turnaround situations.
• Invest Globally: Your best opportunities may lie outside your home country. A global portfolio is a diversified portfolio.
• Be a Student of Market Psychology: Understand that markets are not perfectly rational. Knowing how fear and greed influence others (and yourself) is a significant advantage.