Business

Saturday October 31, 2009

Up close and personal with Kenneth Fisher

By THEAN LEE CHENG


This investment guru and self-made billionaire says he is not fearless when managing big funds as he claims there are larger entities in the market such as big firms and governments.

INVESTMENT guru Kenneth Fisher is going to a party. “The world is a good place. We are just scaring ourselves to death. The aftermath of a bear market is always a bull market,” he says.

Even as he prepares for that party – he is inviting everyone else to do the same – he takes out a neatly folded, longish little piece of paper from his wallet, and opens it with care.

On it is a Rudyard Kipling poem, If. He recites it, on invitation. When he comes to the last line, there is a moment of silence.

“It is my father’s favourite and he drummed this into me when I was a kid. I actually forgot about it, but it came back to me. Until today, I still carry it around. That (the character in the poem) is who my father wanted for me,” says Fisher, who was in Kuala Lumpur recently for the Forbes Global CEO Conference.

At 59, the self-made billionaire is No. 289 on Forbes’ list of 400 richest Americans, with a net worth of US$1.35bil, earned largely from money management. He is also an author and a longtime Forbes columnist. “If anyone had told me that I’d be writing this monthly column for 25 years, I would not have believed him.” His best-selling title to date is Investing by Knowing What Others Don’t and his latest book is How to Smell a Rat: The Five Signs of Financial Fraud

As CEO of Fisher Investments, he manages some US$35bil. Yet despite the millions he personally owns, and those he manages, he is not fearless. “That US$35bil is one-tenth of 1% of the total market. It sounds like a lot of money to ordinary people, but compared to the forces today, it is tiny,” he points out. Fisher says the big forces can be so many things – the big entities, the big firms, the government.

“They are like an elephant that sits on me, not because they want to, but because I happen to be there. So I am little, and in that sense, I am not secure.”

The only way is to keep coming up with new things because the minute he stops, somebody may do “a new thing” to him. “That’s the nature of capitalism, which is defined as creative destruction.”

The youngest of three sons, he learnt very early that if he took on his brothers, he would lose. If he wanted to get something, he would have to figure out how to get it indirectly.

“I always fear big and powerful forces that I have to confront directly. I never fear what I don’t have to have a direct confrontation with,” he says. It is not that he is afraid to lose his millions. On the contrary, he may lose some. But even if he were to lose 90% of his net worth, he could not possibly spend all of the rest, because he does not covet material things. He has more things than he could need. He likes boots and he has several pairs. He points to his jacket which he says is not some fancy suit.

He does not have a lot of fancy things, although he does stay in a posh neighbourhood. He lives in Woodside, California, which is home to some of the country’s wealthiest individuals, such as Steve Jobs of Apple Inc, venture capitalist Vinod Khosla and singer Joan Baez. It is also where his company is located.

He drives a Volvo. About 30 years ago, he bought a car made by the Swedish company. His wife survived a road crash and ever since then, he has been driving Volvos.

Fisher says he did not set out to be rich when he went into fund management. He uses an analogy of an athlete who does not start competing with the aim of being the greatest. However, because the athlete enjoys doing what he does, he eventually becomes good at it.

“I don’t want to be poor. Poverty is not a goal, but I also never expected to be as rich as I am. I have done what I have because I like it. If money in itself were important to me, I would have spend my time buying a fancy house, fancy cars or artwork. The fact that I am wealthy is because I like what I do.

“The irony is wealthy as I am, I don’t have any particular desire to spend the money. You have many people who wish they are rich but they don’t like to do the things to get rich. Instead, they try to get rich by winning the lottery.

“If you take most self-made people who are rich, they like doing something which made them rich.”

Fisher says he would never have thought of going into fund management if not for his father, Philip, a stock investor best known for his book, Common Stocks and Uncommon Profits. His father told him many bedtime stories as a child. The hero was Jerry Clarington and that was who he wanted his son to be when he grew up. Fisher did not understand this until he became older. Jerry was an explorer of the oceans buffeted by pirates and he would vanquish them all. Clarington was brave, ultimately successful and despite being in a world of bad people, he remained good.

“Those stories were far more important than what anyone can tell me about the investment business. My aspirations for my sons are to find something which they wanted to do and to execute it well,” I have mixed success with that says Fisher.

“By the time they were growing up, I was very wealthy. Too many wealthy men’s sons do not need to work. They are trust boys. They don’t do any work, but my goal for my sons is for them to find something they love and to work hard at it.”

On How to Smell A Rat, he says many have been taken in by Ponzi schemes when it is so easy to protect one’s self. Because this part of the world is less exposed, he believes Asia will see more of such schemes. Fisher says the Internet has given criminals a whole new set of tools. In the old world, it was guns and horses and these were easier to deal with.

“The Internet presents us with something our brains are not naturally set up to think through. Most of the stuff invariably relates to somebody operating through servers in countries that do not have extradition procedures with the countries they operate in. We have thousands trying to break through my company’s firewalls to get to the data.”

With the party going on, all the more the need to sharpen our senses in order to smell that rat.

‘If’ by Rudyard Kipling

If you can keep your head when all about you

Are losing theirs and blaming it on you;

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

If you can wait and not be tired by waiting,

Or, being lied about, don’t deal in lies,

Or, being hated, don’t give way to hating,

And yet don’t look too good, nor talk too wise;

If you can dream – and not make dreams your master;

If you can think – and not make thoughts your aim;

If you can meet with triumph and disaster

And treat those two imposters just the same;

If you can bear to hear the truth you’ve spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to broken,

And stoop and build ‘em up with wornout tools;

If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breath a word about your loss;

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: “Hold on”;

If you can talk with crowds and keep your virtue,

Or walk with kings – nor lose the common touch;

If neither foes nor loving friends can hurt you;

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds’ worth of distance run –

Yours is the Earth and everything that’s in it,

And – which is more – you’ll be a Man my son!

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