第 1 章
The Illusion of Market Memory: How Our Forgetfulness Shapes Financial Decisions
Have you ever wondered why even the most brilliant investors struggle to be right more than half the time? The answer lies not in complex economic theories or sophisticated trading algorithms, but in a simple human flaw: we forget. Ken Fisher's "Markets Never Forget (But People Do)" explores this profound disconnect between market reality and human memory. The book, which has become required reading at top business schools and a favorite among financial professionals like Ray Dalio, reveals how our inability to remember market patterns leads to costly mistakes. Fisher, a billionaire investor whose columns have run in Forbes for over 30 years, demonstrates that what seems unprecedented in markets today has almost always happened before-we've just forgotten. This cognitive blind spot explains why investors consistently buy high and sell low, despite knowing better. By understanding how our faulty memory sabotages investment decisions, Fisher offers a path to seeing markets more clearly and potentially joining the elite few who consistently outperform.
第 2 章
The Dangerous Myth of "This Time It's Different"
Sir John Templeton's warning that "this time it's different" are the four most dangerous words in investing remains one of the most powerful admonitions in financial history. Templeton, a pioneering global investor known for his bargain-hunting approach and extraordinary generosity, recognized that human nature evolves slowly, making us repeatedly susceptible to the same market reactions. We falsely believe each recession, credit crisis, or market panic is uniquely terrible because we have poor historical memory-we're essentially "chittering chimpanzees with no memories."
This amnesia is particularly evident in how quickly the "new normal" concept emerges after every crisis. In 2009, this phrase dominated financial media, predicting permanently lower growth and poor market returns due to supposedly insurmountable economic problems. Yet history shows this term typically appears near recession ends when sentiment is bleakest but the future brightest. Similar "new normal" proclamations emerged in 2003, 1987, 1978, 1959, and even 1939-each time wrongly predicting permanent economic stagnation.
Those who acted on 2009's "new normal" fears missed an extraordinary market recovery-world stocks surged 93.3% from March 2009 through 2010, while US GDP returned to growth by Q3 2009. When reality contradicted these pessimistic predictions, proponents didn't admit error-they simply shifted definitions. First claiming corporate profits would remain depressed (they soared), then warning of "high profits without job growth," then expressing concerns about consumer spending.
This "pessimism of disbelief" reflects how people refuse to acknowledge positive developments after market bottoms, finding a "yeah, but" for every improvement. The fears of 2009-2010 mirrored almost exactly those from previous recoveries, like 1991, when identical concerns about debt, credit crisis, housing weakness, bad banks, and tapped-out consumers dominated headlines. What followed wasn't the predicted apocalypse but nearly a decade of global economic vibrancy and a massive bull market.
Markets price in widely known fears, leaving only the unexpected to move markets significantly. By mid-2011, global GDP had already hit all-time highs-a fact almost entirely ignored by media. This pattern repeats because humans remain driven by profit motive, which fuels innovation that eventually overcomes barriers to growth.
第 3 章
The Persistent Myth of Jobless Recoveries
After every recession, headlines inevitably claim "it may not be a recession, but it sure feels like one!"-largely due to unemployment, which continues rising even after recessions officially end. While economists define recessions as "significant decline in economic activity spread across the economy," not feelings, unemployment creates widespread distress that persists into recovery.
This "jobless recovery" complaint emerges after every recession, though each recovery eventually generates jobs at different rates. The explanation is straightforward but consistently forgotten: CEOs don't hire immediately when sales level off or even start increasing after a recession. First, they ensure the recovery is real. They've already cut staff to bare bones and found productivity improvements. Even when sales grow, they wait-using existing staff who've learned to be more productive, rebuilding cash reserves, and watching for sustainability.
Only when they're convinced the recovery is solid and sales staff report "leaving money on the table" do they begin hiring-first with temps and contractors, then permanent staff. This rational business behavior explains why unemployment peaks after recessions end and remains elevated for months or even years afterward.
Waiting for unemployment to fall before investing is costly-data shows buying stocks six months before unemployment peaks yields returns twice as high (31.2%) as buying at the peak (14.8%). Similarly, few things cause memory loss like fear of the near-mythical double-dip recession. Throughout 2010 and 2011, relentless headlines warned of an imminent second downturn, yet no double dip materialized-U.S. and global stocks ended 2010 up 15.1% and 11.8% respectively, with positive economic growth every quarter.
Double-dip fears aren't new-they appeared after the 2001 recession too, with numerous alarming headlines in 2002 despite the economy growing uninterrupted until December 2007. Since 1854, there have been only three clear double dips in 33 economic cycles-just 10% of all cycles. Most occurred before the Federal Reserve existed. When someone predicts a double dip, they're betting on something that rarely happens without compelling reasons to explain away the 90% of cycles that aren't double dips.
第 4 章
The Misconception of Average Market Returns
Bull markets aren't average, nor are bear markets. Average returns are actually very unusual, something investors routinely forget. Stock market returns vary widely, with returns close to the average occurring in only a small percentage of years. People expect bull markets to rise steadily and bear markets to fall in an orderly fashion, but reality is far more chaotic.
During the first year or two of new bull markets, headlines commonly claim "No Bull!" as pundits avoid appearing too optimistic. They dismiss the initial massive bounce off a bear market bottom as "just a bear market rally"-despite this being perfectly normal behavior. V-shaped recoveries are standard market behavior, especially after steep declines. The steeper and bigger the bear market decline, the sharper and bigger the subsequent bull market move tends to be.
Historical data shows the first three months of a bull market average 23.1% returns, with the first full year averaging 46.6%-double the typical bull market year. This V-pattern occurs because early bear markets are driven by deteriorating fundamentals, but late-stage bear markets are driven by collapsing sentiment that pushes prices far below what fundamentals warrant. When the reversal comes, improving liquidity combines with the reality that conditions aren't as catastrophic as feared, creating a mirror image of the late bear market decline.
The "too far, too fast" fear appears consistently throughout market history yet is almost always wrong. From 1958 to 2009, headlines repeatedly warned markets had risen too much too quickly, but these warnings typically came during healthy bull markets with years of additional gains ahead. This fear stems from our innate "fear of heights" cognitive bias-our brains evolved to fear falling from heights, but this instinct doesn't apply to markets.
Despite investors' desire for "normal" market behavior, true market normality is wild variability. The most common annual outcome for stocks (37.6% of years since 1926) is returns exceeding 20%. The next most common are returns between 0-20%. Truly average returns (9-11%) are exceedingly rare-just three instances for US stocks since 1926 and two for global stocks since 1970.
第 5 章
Volatility: Normal, Variable, and Misunderstood
Nearly every year, someone claims markets are "more volatile now than ever before"-a perennial belief that persists regardless of when you look. This fear intensifies during bear market bottoms but exists even in calmer periods. The reality is that stocks have always been volatile and always will be. Volatility itself is variable, and this is actually a feature investors should embrace rather than fear.
People often misunderstand volatility, thinking of downside moves as "bad volatility" while upside moves are just "good" and not volatility at all. But volatility is neither good nor bad-it simply exists. Technically measured by standard deviation (SD), volatility shows how much returns vary from their average. Since 1926, the S&P 500's annual standard deviation has been 19.2%, with a median of 12.9%.
Volatility itself fluctuates dramatically year to year. Surprisingly, the most volatile year ever was 1932 (SD of 65.24%), yet stocks only fell 8.41%. The second most volatile year was 1933, with stocks soaring 54.4%! Similarly, 2009 was actually more volatile than 2008 (21.3% vs. 20.1%), though 2009 saw a 26.5% gain while 2008 was disastrous. High volatility doesn't automatically mean falling markets, just as low volatility doesn't guarantee positive returns.
Despite persistent beliefs that modern factors like high-frequency trading, the internet, or complex financial instruments have increased market volatility, the data shows no statistical evidence of an upward trend. Volatility fluctuates irregularly through time without trending higher. In fact, today's greater liquidity, transparency, and market participation should theoretically make markets less volatile than during thinly-traded periods like the Great Depression.
Contrary to popular belief that speculators increase volatility, they actually provide liquidity and transparency that can reduce it. The onion market offers perfect proof-since 1958, onion futures trading has been banned after farmers convinced Congressman Gerald Ford that speculators were pushing prices down. The result? Onion prices are wildly more volatile than oil prices (SD of 211.4% vs. 33.8% from 2000-2010)-demonstrating how speculators actually help mitigate price swings rather than cause them.
To get return, you must accept risk-often experienced as volatility. If you want less volatility, you must adjust your return expectations downward. The idea of a magical investment delivering market-like returns with significantly less volatility is bewitching but nonexistent. This fantasy is precisely what makes Ponzi schemes like Bernie Madoff's so seductive-his fictional 10% annual returns with minimal variation attracted victims for nearly two decades.
第 6 章
The Myth of Secular Bear Markets
Have you heard the phrase "This is just a cyclical bull in a secular bear market"? A secular bear market is theoretically a very long bear market lasting perhaps a decade with fluctuations along the way. But actual decade-long bear markets simply aren't supported by historical data. Even the longest bear market on record lasted just over 5 years-and that was 75 years ago. Typically, bear markets don't even last two years, while bull markets average 57 months.
Our brains are hard-wired from evolutionary history to focus more on danger than safety. This psychological tendency explains why "secular bears" (perpetually bearish investors) are easy to find in media despite being wrong much more often than right. Bear markets occupy far less time historically than bull markets, yet these pessimists receive disproportionate credibility because human nature automatically respects skepticism as sophisticated and smart.
The two periods commonly cited as secular bear markets don't hold up under scrutiny. The "17 years of zero returns" from 1965-1981 only appears flat when using the flawed Dow Jones Industrial Average without dividends. Including dividends, the Dow returned 4.5% annually (111% cumulatively). More importantly, the properly constructed S&P 500 returned 6.3% annually (180% cumulatively) during this period-below average but hardly a disaster.
The 2000s ("aughts") similarly weren't a true bear market but rather contained multiple full market cycles: a major bear market (2000-2002), a normal five-year bull market (2002-2007), another massive bear market, and then 2009's huge rally. The middle bull market delivered 161% global returns-hardly a "countertrend" within a secular bear.
If perma-bears can dismiss five years of massive upside as a "countertrend rally" within a secular bear market, why aren't the much shorter bear markets just corrections within secular bull markets? No one ever suggests this, revealing our cultural bias toward pessimism. Despite stocks rising vastly more than falling throughout history, we've never commonly coined the phrase "secular bull market."
Simply shifting timeframes exposes the cherry-picking-extending the supposedly flat 1965-1981 period to 1965-1984 yields 342.3% returns (7.7% annualized), and 1965-1989 delivers 1,015.2% (10.1% annualized). The supposed secular bear becomes a secular bull.
第 7 章
Debt Fears: Perennial but Rarely Justified
Debt fears aren't new-they've cycled through market history repeatedly with similar hyperbolic headlines dating back to 1868. Despite continuous debt fears, the world carries on and grows wealthier. Even after the 2008 credit crisis, corporate profits reached all-time highs and global GDP doubled from 2000-2010.
Most investors understand corporate leverage's benefits-companies rationally borrow to fund growth, research, and innovation when expected returns exceed borrowing costs. Different industries naturally require different debt levels based on capital intensity. Yet many become irrational about government debt, failing to remember similar fears that didn't materialize in the past.
Contrary to popular belief, historical data shows US federal budget deficits have been good for stocks while surpluses have been bad. Following deficit troughs, S&P 500 returns averaged 20.1% after 12 months, 29.7% after 24 months, and 35.1% after 36 months. In contrast, after surplus peaks, stocks returned just 1.3% on average after 12 months, 0.1% after 24 months, and only 7.1% after 36 months. This pattern holds true globally, including in Germany, Japan, and the UK.
When governments run deficits, they borrow and spend money that changes hands approximately six times in the first year in America. Though government spending is often inefficient, this money ultimately flows to people and institutions who spend it again and again, creating economic velocity.
Despite widespread fears about government debt, history shows high debt levels haven't caused economic disaster. US debt levels today remain well below WWII peaks, and the 1950s-a period of high debt-saw economic boom, not austerity. Similarly, the 1980s-90s featured elevated debt alongside vibrant economic growth. The UK maintained debt above 100% of GDP for nearly a century (1750-1850) while remaining the world's dominant economy and innovation leader.
What truly matters is debt affordability, not absolute levels. Currently, US federal debt interest payments are just above 2% of GDP-half what they were during the prosperous 1980s-90s. Even after S&P's 2011 downgrade of US credit, Treasury rates fell to historic lows, showing markets weren't concerned about US debt sustainability.
第 8 章
The Danger of Category Loyalty in Investing
Many investors develop unshakable beliefs that certain investment categories-small caps, large caps, value stocks, tech stocks, dividend payers-are inherently superior. They often present data "proving" their category is best, typically using cherry-picked time periods or flawed methodologies. While some categories like small caps have outperformed historically (12.0% versus the market's 9.9% since 1926), these statistics ignore crucial factors like the massive bid/ask spreads of earlier eras, survivorship bias, and transaction costs that would have made actual implementation nearly impossible. For instance, in the 1960s, small-cap bid/ask spreads often exceeded 5%, making frequent trading prohibitively expensive.
No equity category is inherently superior-each has periods of outperformance and underperformance. This rotation happens because stock prices are driven by supply and demand, with supply relatively fixed in the short term but highly variable long-term as investment bankers respond to market trends. Consider how technology stocks dominated the 1990s, only to underperform for the entire following decade, while seemingly boring utilities and consumer staples took the lead. Similarly, energy stocks were market darlings in the 2000s before becoming laggards in the 2010s.
When a category becomes hot, bankers help companies issue new shares to meet demand, continuing until supply exceeds demand and prices fall. For example, during the dot-com boom, technology IPOs flooded the market, with 446 tech companies going public in 1999 alone. This oversupply contributed to the sector's eventual collapse. The cycle repeats across different categories as market enthusiasm shifts. Over very long periods, well-constructed categories tend to deliver similar risk-adjusted returns, with fluctuations tied to unpredictable supply shifts and changing investor sentiment.
Permanently favoring one investment category resembles long-term forecasting-both typically fail. Forecasts beyond 24 months are unreliable because they can't account for how investment bankers will shift stock supply years from now. Consider how few analysts in 2000 predicted the rise of emerging markets in the following decade, or how many experts in 2006 foresaw the financial sector's imminent collapse. While any category can lead for extended periods, there's no way to predict which one will outperform over the next decade without knowing future supply dynamics and regulatory changes.
We have a natural tendency to believe investments with good recent performance are inherently safer, a cognitive bias known as recency bias. This "heat chasing" behavior led to numerous bubbles throughout history-from the 1636 tulip mania to the South Seas bubble of 1720 to more recent examples like Energy in the 1970s, Tech in the 1990s, and residential real estate in 2005-2006. Japanese stocks in the 1980s and cryptocurrency in 2017 provide additional examples of category-specific manias. This pattern-seeking behavior is evolutionary-we're wired to follow successful patterns for survival-but it's disastrous for investing, often leading to buying high and selling low. Research shows that investors who frequently chase hot categories typically underperform those who maintain diversified portfolios across multiple categories.
第 9 章
Politics, Markets, and Our Selective Memory
Investors' memories fail spectacularly when it comes to politics. Many believe their preferred party is better for stocks and the economy, despite evidence to the contrary. Even when confronted with historical data disproving their beliefs, partisan investors find ways to dodge contradictory evidence by reframing time periods or citing exceptions.
Despite strong beliefs to the contrary, neither Republicans nor Democrats are materially better for stocks long-term. Republicans often think they're more business-friendly while Democrats claim economic superiority, but history contradicts both claims. While stocks averaged 9.3% annually under Republican presidents versus 14.5% under Democrats since 1926, this difference largely stems from Great Depression volatility. Remove that outlier and returns are much closer (11.1% versus 13.6%).
The truly significant pattern is that presidential term years three and four average substantially higher returns (19.4% and 10.9%) than years one and two (8.1% and 9.0%). This pattern stems from legislative risk aversion-legislation typically redistributes rights or money, and humans hate losses more than twice as much as they like gains. The first half of presidential terms typically sees more legislative activity and thus higher risk aversion, while the second half sees decreased legislative risk as presidents focus on re-election.
Market returns vary dramatically based on election cycles. Democrats newly elected show negative returns in election years (-2.7%) but strong returns in inaugural years (22.1%). Republicans newly elected show the opposite pattern with strong election year returns (18.8%) but negative inaugural year returns (-0.6%). These patterns are consistent yet investors miss them due to political biases that blind them to market realities.
Political cycles affect markets globally, often more dramatically than in the US. China's communist government manipulates economic growth around its five-year National People's Congress election cycle. They deliberately slow growth in the year before elections, then apply heavy stimulus during election years to maintain public support. Data shows Chinese GDP grows 0.9% faster than average during election years, while slowing 1.1% below average in the pre-election year.
第 10 章
Our Forgotten Global History
Despite common claims about our "increasingly global world," the reality is that global interconnection isn't new-it's always been this way, just progressively more so over time. Yet most investors fail to recognize this, with Americans investing only about 14.4% of their portfolios overseas despite non-US stocks making up 57% of world markets.
Historians often mistakenly view globalization as starting after World War II, ignoring that the world was intensely interconnected well before WWI. Economic data from as far back as 1790 shows business cycles in major developed countries moving largely in sync. When Wesley Mitchell (founder of the National Bureau of Economic Research) tracked these cycles across the US, UK, France, and Germany, the pattern was clear-recessions and expansions largely aligned across nations, with some leading and others lagging.
Capital markets have been globally linked for centuries, with US and non-US developed world stock markets typically moving in the same direction even when return magnitudes differ. This contradicts the common belief that foreign stocks are inherently riskier-if that were true, US and non-US markets wouldn't behave so similarly. Over the long term, foreign stocks have annualized at 9.4% compared to the US at 10.0%-remarkably close returns despite taking different paths.
The 1929 crash exemplifies how global markets have always been interconnected. London and Berlin markets peaked first in 1928, warning of trouble before New York's crash. Most Americans mistakenly view the Great Depression as a purely domestic phenomenon, but it was entirely global. Markets were pricing in disastrous policies like Smoot-Hawley tariffs (debated long before passing in 1930), which triggered retaliatory tariffs worldwide and collapsed global trade by two-thirds.
Global economic trends typically overpower local factors. If the rest of the world is growing strongly, it's nearly impossible for the US to move in the opposite direction regardless of domestic problems. Conversely, if the world heads into recession, America won't avoid it even when doing everything right. While country-specific drivers like tax rates and regulations matter, they're secondary to global trends.
Performance leadership among countries changes dramatically year to year-the top five performing countries are almost always different, with the US infrequently in the top five. This creates a world of risk management and performance enhancement opportunity if you choose it. Going global isn't just for after non-US categories like Emerging Markets have been hot-it's always beneficial. What you really want are categories that haven't gotten hot yet, as Sir John would advise.
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