In his New York Times bestseller, The Only Three Questions That Still Count, Ken Fisher poses three questions that every investor, novice or professional, should constantly have on his or her mind. This self-made billionaire is a testament to his successful business strategies, making Fisher one of the top 30 most influential people in the investment industry. With nine books to his name and 28 years as a Forbes columnist under his belt, would-be investors would do well to take his advice.
1. What Do I Believe That’s Wrong?
The very first of the three questions that still count may seem to have little to do with investing, but it’s a crucial question in any economic climate. It’s good to ask yourself what could possibly be wrong with the current economy or standard investment practices. Does investing in the stock market make sense to you or is real estate a better option? What are the aspects of any strategy that could pose a setback?
One thing that could be wrong with your current investment strategy is something tied to US policies or the performance of the American dollar. The housing bubble is one consequence of something that was majorly wrong with investments in years past, and few saw it coming.
2. What Can I Fathom That Others Can’t?
Beginner investors research information from the typical sources. They look online, ask financial advisors at their local bank, and trust that they’re doing all the “right” things to make a return on their money.
The truth is that most self-made millionaires and billionaires approached investing in a completely new way. They took advantage of something others missed. Maybe you understand an aspect of investing that others have never considered. Ask yourself how you can jump off the bandwagon and branch out into something new.
3. What is My Brain Doing to Mislead Me?
The last question Ken Fisher poses in his book has to do with behavioral finance. Many investors end up failing because they are overconfident and disillusioned. These common cognitive errors often lead to failed investments.
Consider the crash of 1929 that led to the Great Depression. The stock market was strong and everyone was putting their money into it, confident they would make huge returns, and then reality set in. Just because an investment method has worked in the past doesn’t necessarily mean it will continue to work in the future.
Learning more about Fisher’s scientific method and keeping these three questions in mind may help guide you on your path to financial success.
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