Recently Ken Fisher’s book The Making of a Market Guru, John Wiley & Sons, 2009 was read. The book is a collection of Mr. Fisher’s Forbes magazine columns from 1984 to 2009.

Mr. Fisher wrote about his Dad who was in the investment business, and a few of his classic statements were: always think the long term, buy what understand and be yourself. Ask a question such as what is the management doing that the competition is not doing? Great managements live the answer and produce great stocks.

A great deal of investing has to do with your mind set and answering 3 questions will help you be a better investor: 1. What do you believe is true that is actually wrong? -perhaps it is saying or a myth. 2. Can you fathom the unfathomable? and 3. What is your blind spot?

In another column, Mr. Fisher noted when you look at any annual report, before looking at the Balance Sheet  read the footnotes. The more complex the footnotes, a warning light should come on to avoid the stock. Accounting is a fluid process, for example changing the way revenues are calculated from one year to the next, although perfect legal, changes the outcome. Companies are similar to people in they wish to give the best appearance possible and if things are not going to what the market is rewarding, changes can and will be made. Examining the footnotes to the report allows you to see if the annual report became more complex. If it does, it is a big warning sign. What usually happens with complex footnotes is at some point in the future, write downs happen. Also, remember the quarterly reports are not audited, they are selling tools for the management.

With Mr. Fisher’s book, it would be easy to write many more parts, suffice to say, reading his columns either online or in Forbes is a good thing to do.

Linking to dividend producing stocks, one of the reasons this blog likes to begin with dividend producing stocks is to narrow the field of choice. There are many stocks on exchanges, many of them could be the next great thing, they also could be wallpaper. If you start with dividend producing stocks, at least you start with companies making money and overtime the shares should rise as well as your wealth. As we all live longer, we need income and growth to beat inflation and the combination of stocks plus the dividends does this well.

There are more questions than answers, till the next time – to raising questions