Ken Fisher's Debunkery Modified Book Excerpts

Ken Fisher's Debunkery – BUNK 20: EQUITY RISK PREMIUMS - FORECASTING FUTURE RETURNS WITH EASE

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:59:59 PDT

Wish you could know where stocks will be in 10 years? Ken Fisher does too! Ken Fisher doesn't think it's possible. Still, people try. There's a notion in academia about the equity risk premium (ERP). The ERP Ken Fisher explains is, literally, the premium you get, expressed as a percentage over some supposed risk-free rate - like the 10-year US Treasury - from holding stocks. Some folks use the T-bill rate. Either way - same basic concept. And there's nothing wrong with that! It's true - most often investors are rewarded long-term for taking extra volatility risk (done right). And theoretically Ken Fisher notes, investors should be rewarded for suffering through stock market swings. (Although, they hate the volatility. And the more the volatility, the more they hate it when they rationally should love it since, in the long run, they usually get paid handsomely for it.) If you weren't likely to get higher reward for higher risk, why would anyone want the higher risk - whether measured by volatility or otherwise? The problem with ERPs is some academics try to model future ERPs - predicting future stock returns. Bunk. Ken Fisher has never seen any ERP model stand up to historical back-testing. Not one! Yet, every year, we get a new wave of them. Find more detail on BUNK 20 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 19: BETA MEASURES RISK

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:56:05 PDT

Stocks are risky. Simple fact! But to get return, Ken Fisher explains, you must take risk - which many folks feel as volatility. (See Bunk 6.) Volatility is uncomfortable near term for most folks and quite unpredictable - and makes investing even harder than it might be otherwise. Makes many go mental - drives'em nuts, pure and simple Ken Fisher notes. Because people are prone to like order, we like to measure. Take beta, for example - the academic concept, widely accepted throughout media and the investing culture, that claims to measure investment risk. Take it outside and leave it there. It's useless Ken Fisher believes. No - less than useless. Folks (particularly academics who first foisted beta on us) like to think beta measures risk. No - it measures prior risk. Ken Fisher illustrates it measured risk - past tense! It doesn't measure anything about the present or future. Beta itself is a simple and accurate calculation. A stock's beta is a number representing its past volatility relative to the overall market's past, over a specific period. The higher a stock's past volatility, the higher its beta. If a stock moved perfectly in line with the overall market (usually in calculating beta, folks use the S&P 500 as the market index - but beta can be calculated against any market index), its beta is 1.0. Lower, and it was less volatile than the market; higher, and more so. Simple enough. Read more on BUNK 19 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 18: DO BETTER WITH MUTUAL FUNDS BY SENDING YOUR SPOUSE ON A SHOPPING SPREE

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:49:07 PDT

Whatever you do, Ken Fisher states, don't let your spouse read this chapter or he or she will hate you unless you do what Ken Fisher says. Because he or she will either know you're not doing as well as you could with your mutual fund investments, or demand the right to a shopping spree. Sound nuts or weird? It isn't. Some folks think Ken Fisher is anti-mutual funds. He is not. At all! You know they're a fine vehicle for smaller investors to diversify and get access to professional money management or passive commingled investing more efficiently Ken Fisher explains. But for big investors, Ken Fisher illustrates, they are pretty inefficient and costly. The wealthier you are, the more relatively inefficient they are - and for big investors there are a million better ways to skin that cat. But for smaller pools of assets, the benefits of diversification can outweigh all drawbacks. And mutual funds as a "packaging device" are awfully convenient. Plus, plenty of mutual funds get fine performance Ken Fisher notes. And you know to pay close attention to the fees with these funds - the higher they are, the more they erode returns. But this is also where folks miss a basic investing truism. Ken Fisher hears from plenty of investors who think their "no-load" mutual funds are just grand. No fees means cheap! Maybe - but sometimes, "cheap" comes at a huge cost. With funds, this is a provable and very slippery slope into potential bunk. Sometimes more is less. Discover more on BUNK 18 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 17: PASSIVE INVESTING IS EASY

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:48:52 PDT

Passive investing, for the uninitiated, is the idea you mimic an index Ken Fisher illustrates - either through an index fund, an exchange-traded fund (ETF) that looks like the index, or you buy the stocks in an index in perfect proportion to the index (this latter being possible only if you have a lot of money or there aren't many stocks in the index). Then you simply hold on as the index does whatever it does, forever, come what may, throughout your investing time horizon. Ken Fisher explains the theory is: By simply buying the market passively and holding on, you can do effectively the same as the market - and do better than most people who overwhelmingly lag the market over time by making active decisions that blow up on them. And there is nothing wrong with that Ken Fisher notes, in theory. If you do this perfectly you'll lag the market by a hair's whisker - by whatever transaction costs or fees you incur, but only by that amount. And that's quite fine. Doing this beats most investors since most investors lag the market. But then Ken Fisher commonly hears, "Passive investing is easy." It isn't. It's very, very hard. Find out why in more details on BUNK 17 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 16: EQUITY – INDEXED ANNUITIES - BETTER THAN NORMAL ANNUITIES

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:46:08 PDT

If you're skipping around and haven't read Bunk 15 yet on variable annuities, go there first, then here. This bunk builds on the other bunk like a bunk bed. Ken Fisher explains annuity firms know annuities are a tough sale (that's why they pay such big commissions to salespeople!) and folks are figuring out they get lousy growth plus huge fees. So they created a relatively new product - equity-indexed annuities - sold frequently as having more upside potential than a standard variable annuity. Fair enough, but is it true? Ken Fisher describes there are two basic ways these are sold. The First Pitch Growth is guaranteed at a minimum rate (like 6 percent) and investors get full upside participation in the stock market. Ken Fisher notes who doesn't want a guaranteed return floor and full upside? The Catch The drawback, Ken Fisher illustrates, comes from the confusing nature of linking insurance and investments. (Never forget, Ken Fisher notes: An annuity is, first and foremost, an insurance contract.) Normally, with these annuities, it's the income base growth that's guaranteed, not the actual account value - which fluctuates up and down with the market like any other investment, albeit usually with much higher fees. The income base doesn't really apply unless you decide to surrender ownership of the account in return for regular distributions based on the income base size. Read more on BUNK 16 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 15: VARIABLE ANNUITIES ARE ALL UPSIDE, NO DOWNSIDE

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:39:46 PDT

Ken Fisher has been accused of being hard on variable annuities. So he apologizes. Ken Fisher apologizes to every high net worth investor for being hard on variable annuities in his public writings instead of über-hard. Instead, Ken Fisher explains it would be better if he had done more to keep people - like you - from buying one. (Hopefully, you haven't bought one.) There is little worse for high net worth investors (and plenty of other investors) than these, particularly equity-indexed annuities. That these are a "safe way" to get market-like growth with less risk is first-order slam-dunk bunk. First and foremost - annuities are insurance contracts, and only as good as the firm behind them, Ken Fisher notes. Investors in 2010 and beyond will remember well: Insurance firms can and do go kaput. If the firm issuing your annuity goes bankrupt, your contract may be null and void and the premiums simply lost. This is radically different from investing in stocks and bonds. The brokerage firm can go kaput (and they do) but with no impact on your ownership of publicly traded stocks Ken Fisher reminds you. (Unless you happen to own stock in the bankrupt brokerage, which likely went to $ 0. But then, that's an issue of never holding more than 5 percent in any one stock so one blow-up doesn't take your entire portfolio down - basic rule covered in Bunk 33.) Learn about the details behind BUNK 15 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 14: DOLLAR COST AVERAGING - LOWER RISK, BETTER RETURNS

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:37:27 PDT

What is dollar cost averaging (DCA)? Ken Fisher explains it is investing periodically a little at a time. But isn't that what you do with your 401(k)? You sock away a little each month, probably (hopefully) if you are maxing out your 401(k) each year (which most all of you should be doing – Ken Fisher reminds readers). Not entirely, as Ken Fisher goes on to detail. Folks portion out their 401(k) contributions because they usually don't have the cash flow all at once to max it out in one month, so they do it periodically. And the IRS limits how much you can contribute each year, so you're forced to spread contributions out over a long time. DCA is different - when folks have a big boodle to invest, instead of plunging headlong into the market, they often do smaller lumps, spread over time. The theory is DCA protects you from investing it all on a "bad" day. Maybe you accidentally invest at a relative high - just before a big correction. Or worse - at the top of a bull market. We all know we don't want to "buy high." Dollar cost averaging reduces the risk of getting "all in" on a bad day - spreading out your cost basis over time. And yes - it does do that. But does that actually improve your returns over time? Probably not, Ken Fisher notes. But it definitely increases transaction costs - that alone reduces your performance. Read why and other details of BUNK 14 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 13: COVERED CALLS . . .GOTCHA COVERED

(Fisher Investments Webmaster) — Thursday, 09 Dec 2010 14:29:27 PDT

The name "covered calls" alone is comforting, Ken Fisher acknowledges - even if you don't know what it is! Who doesn't want to be covered? As in, "Hey, dude! Don't sweat it; we gotcha covered." Or, "If you're cold, get covered up." Just sounds right. Technically, Ken Fisher explains covered calls combine a long stock position and a written call option. Many investors like these because they get a little bit of instant income from the premium received from selling the call. And there's not much risk from the call option. If the stock rises to the strike price before the expiration date, you just hand over the stock. That's why it's covered. Sounds safe! Income and seemingly low risk! How cool is that? That's how they are usually sold in the brokerage world. At the same time, most folks who like covered calls and think they're safe will say with certainty that naked puts are risky. Covered is safe, but naked is crazy risky! Naked just sounds bad. "Hey, dude, you're hanging out there naked." Or, "I was warm until I got naked in the snow." But naked and covered don't mean what you may think or what most investors think. In this case, and counter to what every single covered call operator Ken Fisher has ever seen believes, they mean mathematically exactly the same thing - as Ken Fisher shows you. See the reasoning behind Bunk 13 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 12: STOP - LOSSES STOP LOSSES!

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:43:27 PDT

Stop-loss! Even the name sounds great, Ken Fisher notes. Who doesn't want to stop losses? Forever! Sadly, stop-losses don't guarantee against losses — you can lose money with them, and badly. You can also stop future gains, pay more in transaction fees, trigger taxable events, and otherwise make much less money than you would simply leaving these be. It would be more accurate to call them "stop-gains." In the long term and on average they are a provable money loser. How Do They "Work"? Ken Fisher explains a stop-loss is some mechanical methodology, like an order placed with a broker, to automatically sell a stock (or bond, exchange-traded fund [ETF], mutual fund, the whole market, whatever) when it falls to a certain dollar amount. You pick any arbitrary amount you like. Ken Fisher observes that people usually pick round numbers like "15 percent lower than where I bought it" or 10 percent or 20 percent — no reason; people just like round numbers. They could do 13.46 percent or 17.11 percent but they don't. When the stock hits that amount, it's sold. No big 80 percent drops. No disasters. Sounds great, right? Find out the truth behind Bunk 12 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 11: A GOOD CON ARTIST IS HARD TO SPOT

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:38:00 PDT

The first thing Ken Fisher says in Bunk 11 you know. The rest Ken Fisher explains you likely don't. In December 2008, news hit of the world's all-time largest financial scam. Bernard Madoff scammed investors out of as much as $65 billion. There was, effectively, nothing left in the coffers when authorities rushed in. All gone! You saw the stories splashed across newspaper headlines and the nightly news. Though Madoff was the biggest scamming rat by far, Ken Fisher notes that news quickly followed about other similar scams. Had Madoff not been first, Texas-born Antiguan knight "Sir" R. Allen Stanford's (alleged) Ponzi scheme would have been the biggest ever. His was merely $8 billion. The SEC charges it was a pyramid scheme — nothing more. Stanford had even been a repeat member of the Forbes 400 with what in reality was an illusory net worth. Unlike Madoff, who confessed, Stanford has denied all allegations, been charged, and awaits trial — but it doesn't look good for him, Ken Fisher points out. The evidence against him appears beyond overwhelming. Through 2009 and into 2010, more news about other, though smaller, scams broke — a seemingly endless stream. But for the victims, Ken Fisher explains, it doesn't matter if the con artists scammed a big sum or small. If he stole from you, your loss was, in most cases, total. Also endlessly, media, investors, and authorities asked, "How did this happen? How could this happen?" To find out more read Bunk 11 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 10: GROWTH IS BEST FOR ALL TIME. NO, VALUE. NO, SMALL CAPS

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:31:48 PDT

Ken Fisher acknowledges that many investors, even professionals, have an investing size and/or style they favor. Large cap. Small cap. Small value. Mid-growth. Maybe they are more specific — only investing in large Tech firms. Small Midwestern banks. Mid-cap Consumer Discretionary, but only if they are value and German. Money managers and mutual funds often offer "products" adhering to strict size and/or style guidelines. And Ken Fisher notes there is nothing wrong with that. That is how the institutional world functions and has for decades. Except, typically, institutional clients will ensure they have exposure to essentially all the major styles and sizes (growth and value in small, mid, and large cap, domestic and foreign, and all the standard sectors). When institutions do that, they typically either do these slices passively or hire what they consider to be best-of-breed portfolio managers in each category. But many individual investors, even professionals, mistakenly think their favored size and/or style is tops — the best for all time — and will continue being best going forward. And they invest solely or mostly in that particular size/style/category. Ken Fisher explains - A major mistake! Read more about investing sizes and styles in BUNK 10 of Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 9: MAKE SURE IT'S A BULL BEFORE DIVING IN

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:24:43 PDT

To discuss Ken Fisher's Debunkery – Bunk 9 – Ken Fisher gives readers a scenario. Suppose it's a bear market. The big, the bad, and the ugly one! Maybe you have stayed invested throughout — that sure hurts near term. Plus, bear market volatility is huge and scary. Should you bail, wait out the end, then get back in when the signs are clearer? (Ken Fisher asks another question: Are you that good a market timer?) Or maybe you are out and know you need to get back in. But when? All that whipsawing is beyond terrifying. Better to just wait until it is certain the bear market is over, a new bull has begun, and all is clear, right? No — Ken Fisher explains, as counterintuitive as it seems, risk is actually least just when sentiment is most black — right as a bear market hits its lowest depths. Clarity is one of the most expensive things to purchase in capital markets and is almost always an illusion. Ken Fisher states no one can perfectly time a bear market bottom. Someone telling you otherwise is deluding himself (or herself) or trying to mislead you (see Bunk 11). Or got lucky once. Read more details of BUNK 9 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 8: ONE BIG BEAR AND YOU' RE DONE

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:16:15 PDT

Bear markets hurt emotionally — a lot. Ken Fisher calls the stock market The Great Humiliator (TGH). And TGH likes nothing more than scaring as many people out of as many dollars for as long as it can — before it goes up (or down). A bear market is TGH at its absolute deadliest. Ken Fisher goes on to detail how the TGH robs people of returns any way it can. First, near term, an investor is down big. Huge unrealized losses. Utter humiliation, fear, and agony. Also, TGH knows people hate losses more than they love gains. Therefore, bear markets are so painful they make folks do crazy things that ultimately hurt them — for most of them, as Ken Fisher points out, much worse in the long term than if they simply sat on their hands. Things like capitulation-selling at the absolute low. Far too many investors, on their own, do this to their heavy detriment — often in the name of "waiting for clarity." Or, in the depths of bear market agony Ken Fisher goes on to explain, many investors suddenly decide they can't handle big stock volatility anymore (or whatever the myriad other reasons) and change their long-term strategy to hold a bunch of cash and bonds, right in time to miss the huge stock market bounce off the bottom. (Read more in Bunk 9) Discover more details of BUNK 8 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 7: TRUST YOUR GUT

(Fisher Investments Webmaster) — Monday, 15 Nov 2010 08:10:27 PDT

Ken Fisher opens Bunk 7 by asking the question - Ever had a gut feeling? You just knew you should buy XYZ stock but did not — for whatever reason — then it skyrocketed 300 percent. Or you knew to sell ABC stock — but ignored your instinct — then it plummeted 80 percent. Ken Fisher reminds readers that you have these feelings all the time, and they are usually right — as you recall. But Ken Fisher explains that is also almost certainly your mind being your worst enemy and playing tricks on you. There is a major school of behavioral psychology now, called behavioral finance, dedicated to understanding how our brains evolved — to deal with basic problems of human survival — and why that leads to serious investing errors. Whole books have been and will be written on the topic, and it was the basis for Ken Fisher’s third question in Ken Fisher’s 2006 book, The Only Three Questions That Count. Ken Fisher notes that our brains produce some very basic bunk, making it difficult to deal with counterintuitive problems like publicly traded markets. And one major bit of bunk is the notion you should trust your gut. Read further details behind BUNK 7: TRUST YOUR GUT in Ken Fisher’s Debunkery.

Ken Fisher's Debunkery – BUNK 6: "CAPITAL PRESERVATION AND GROWTH" IS POSSIBLE!

(Fisher Investments Webmaster) — Friday, 12 Nov 2010 07:54:41 PDT

"Capital preservation and growth" is something the investment industry babbles about a lot and folks crave — but Ken Fisher demonstrates it works as well as a one-calorie dessert. Basically, it is the idea you can get some moderate amount of growth while preserving your capital and not experiencing pesky near-term volatility. Sounds wonderful! Most of the taste but none of the fat or calories! Everybody wants it. And many attempt it. But the result is far from what you'd like it to be. It sounds great but just is not possible. No more real than Santa Claus. Yet Ken Fisher is consistently astounded at how many people — professionals even — believe this bunk. True capital preservation requires absence of volatility risk — no downside, but basically no upside either. Because, as Ken Fisher points out, the one requires the other. Ken Fisher specifies volatility risk because there are many kinds of risk — volatility is just one. Ken Fisher reminds you that there is interest rate risk — that rates fall so when a bond matures you either must accept a lower yield or reinvest into something higher risk to get a similar yield. There is also opportunity cost — the risk of not having enough risk, so you miss out on an alternative with potentially better longer-term performance going forward. Or inflation risk. There are near endless risk types Ken Fisher notes — but folks aiming to preserve capital are usually most concerned with volatility. Read more details of BUNK 6 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 5: YOU SHOULD EXPECT AVERAGE RETURNS

(Fisher Investments Webmaster) — Thursday, 11 Nov 2010 08:57:52 PDT

One reason folks fall prey to investing con artists (more on this in Bunk 11) Ken Fisher explains, is they buy into the bewitching idea that consistently high and positive returns, year in, year out, are possible. Not just positive — but positive, high, smooth, and steady — dreamlike. Far too many folks are scammed (or make bad investment decisions that hurt later) Ken Fisher notes because they believe it’s reasonable to expect performance of 10 to 12 percent year after year. And why not? – Fisher asks. They know stocks over the long term have done that on average — give or take a bit depending on what time period you measure. So just what's the harm in averaging 10 percent a year, anyway? Not a thing Ken Fisher states — but over long time periods. The problem is certain scammers claim to get 10 to 12 percent each and every year (which is what Bernard Madoff claimed Ken Fisher reminds readers). Not on average. Regularly! Market is up 35 percent? They get 12 percent. And if markets fall 15 percent, they still get 10 percent. No surprises. No big up years, but no big down years either — ever. Smooth! Some poor folks believe the guy they found is just that good. Some con artists bag victims by playing straight to greed. Unbelievably, they promise hugely above - average returns with little risk. But more play to humans' innate fear of volatility (and a little bit of greed) by claiming to get smooth, slightly above average but very, very consistent returns. Afterward, some of Madoff's victims claimed they thought they were being conservative by not demanding hugely above – average returns! But getting long - term average returns every year is a pipe dream — and that is easy to verify yourself through debunkery. Ken Fisher points out the fact is: Average returns aren’t normal. Normal yearly returns are extreme. Read more details of BUNK 5 in Ken Fisher's Debunkery.

Ken Fisher's Debunkery – BUNK 4: AGE EQUALS ASSET ALLOCATION

(Fisher Investments Webmaster) — Wednesday, 10 Nov 2010 10:49:04 PDT

There are thousands of books, seminars, and graduate theses on asset allocation Ken Fisher notes. While professionals, academics, and amateurs have myriad different and frequently competing views on asset allocation, various popular prescriptions are driven entirely by age. For example, Ken Fisher looks at the popular saying: Take 100 (or 120), subtract your age, and that is the percentage you should have in stocks. Friends: Age is a factor, but by itself is not enough. Is Age All That Matters? If age were all that mattered, Ken Fisher provides the example that then two gentlemen aged 75 with similar - sized portfolios should have nearly the same asset allocations — always! If you are a financial-services professional, maybe you like this idea. First, it is less work for you — your client’s age becomes the singular driver, and that is easy to figure out. Second, it provides you with cover. Clients can’t complain you steered them wrong on allocation because you followed a simplistic equation. Neat! If you have read Ken Fisher's Bunk 3, you already sense the age factor alone is wrong. Why should people with different goals, income needs, return expectations, family situations, life expectancies, you-name-it, have allocations determined just by their ages alone? Age is a factor, but just one. And the asset-allocation decision is vital — it determines your portfolio's benchmark — or what you are trying to accomplish with your portfolio. Read more details of BUNK 4, including how to determine your benchmark, in Ken Fisher’s Debunkery.

Ken Fisher's Debunkery – BUNK 2: WELL- RESTED INVESTORS ARE BETTER INVESTORS

(Fisher Investments Webmaster) — Tuesday, 09 Nov 2010 10:52:57 PDT

Can you sleep at night? Ken Fisher examines why for some reason, many investing professionals and pundits have a creepy fascination with what happens in your bedroom. Cooked into their recommendations is often the elusive "sleep at night" factor (which, believe it or not, is not a primary benchmark determinant — see Bunk 4 Many people just can’t stomach volatility, Ken Fisher explains, — wild wiggles make 'em crazy! Give them ulcers and keep them up at night. For those folks, Fisher asks that before we consider dooming them to what is likely a lifetime of lackluster returns, he would put a few hard questions to them. Are You So Sure Stocks Are the Problem? First, Ken Fisher asks, do you know bonds can and do have down years? (You do if you read Bunk 1!) Second, Ken Fisher clarifies are you so sure you hate wild wiggles? Ken Fisher explains that folks think of downside volatility as bad and upside volatility as not volatility at all. But it is all volatility. You like the wild wiggles when they are up wiggles. It is amazing how many folks claiming they hate stocks at the end of a bear market — don’t want to hold them ever again — change their tune radically after a couple or three or six years of a bull market and come back to stocks (sometimes just in time to get hammered again). Suddenly, they can't get enough "risk" — want to load up on it. Read more details of BUNK 2, including other questions Ken Fisher puts to people who claim they just can’t stomach volatility in Ken Fisher’s Debunkery.

Ken Fisher's Debunkery – BUNK 1: BONDS ARE SAFER THAN STOCKS

(Fisher Investments Webmaster) — Thursday, 04 Nov 2010 11:08:53 PDT

Bonds just feel safe. Ken Fisher explains that the very name even implies safety — as in, "My word is my bond." Far too many investors with long – term growth goals load up on bonds, presuming they’re safer than scary stocks. But are they? As Fisher looks deeper into this bunk, he discovers that depends largely on how you define "safe". Ken Fisher asks these questions to find out. Does "safe" mean a high probability of lower long-term returns with less near-term volatility? Or is "safe" increasing the probability your portfolio grows enough to satisfy your long-term growth and/or cash flow needs? If you need a certain amount of growth to maintain your lifestyle in retirement, you might not feel so "safe" when you discover having too little volatility risk for too many years later means you must subsequently dial back your lifestyle. And you may not feel "safe" when you must explain that to your spouse — particularly if in that future there is any huge inflation spurt (always possible). Bonds Can Be Negative, Too Yes, stocks can be pretty darn volatile and scary — near term. But Ken Fisher reminds people that they forget: Bonds do sometimes lose value in the near term too. Read more details of BUNK 1 in Ken Fisher's Debunkery.