Research Innovator

innovator

In addition to being a best-selling author and self-made billionaire, Ken Fisher is also a renowned innovator of investment theory and author of several academic studies. Ken Fisher's most recent research focuses on the emerging field of behavioral finance, where he has worked with Dr. Meir Statman of Santa Clara University. Published in professional and scholarly journals, their "Cognitive Biases in Market Forecasts" appeared in the Fall 2000 issue of the Journal of Portfolio Management and won JPM's Outstanding Article Award for 2000-2001. Click here for a comprehensive list of Ken Fisher’s academic articles.

Price-to-Sales Ratio

In his 1984 best-selling book, Super Stocks, Ken for the first time described in detail a method (among many) his company had been using to value stocks and craft forward-looking expectations. It was the price/sales ratio (PSR)--now a commonly used metric but at the time unused by most investors until Ken championed it. In his view, for many stocks, it was a better tool than more popular valuation methods like the price-to-earnings ratio. In the book, he gives a detailed look at why the PSR was useful, what it was measuring, and how it could be used to better forecast stock price direction.

Ken’s work surrounding the PSR popularized the use of the tool as an indicator for undervalued stocks and is now frequently included as required curriculum for the CFA exam.

Behavioral Finance

Ken Fisher has been an active pioneer in the field of behavioral finance. He's written a number of academic papers on the subject, published in the Journal of Behavioral Finance, Journal of Financial Research, Journal of Investing, and Journal of Portfolio Management. His 2000 paper, "Cognitive Biases in Market Forecasts," co-authored with Meir Statman, won a Bernstein Fabozzi/Jacobs Levy Outstanding Article award. Ken’s 2006 New York Times bestselling book, The Only Three Questions That Count, demonstrated to readers how to use behavioral finance to better craft forward-looking market expectations. Behavioral finance is an integral part of how Fisher Investments shapes market forecasts, and Ken continues writing on the subject to this day.

Large Cap Investing

Most in the investing industry recognize three "size" categories for equities--small-capitalization stocks, mid-cap and large-cap. But there’s no standard level for where each level begins. Frequently, investors identify an arbitrary level--e.g., any stock over $10 billion or $20 billion is "large"--but without any fundamental reasoning behind the distinction.

Instead of having an arbitrary line in the sand that doesn’t provide a meaningful frame of reference, Ken Fisher considers size differently. He believes a better way to think about size is relative to the market's weighted average market cap. Fisher's research shows stocks with market capitalizations above the weighted average market cap act more like big stocks, whereas stocks smaller than the weighted average behave more "small"--even if that stock has a market capitalization of $40 billion or $50 billion. This more fluid but fundamental way of considering size yields categories that have more size properties in common.