The Making of a Market Guru: Forbes Presents 25 Years of Ken Fisher

Chapter 9. 1992: Times, They Were a Changin'

"You can always find things wrong with the world. There is never a shortage of problems. Never has been. Nor a shortage of people who love to fixate on them. The only thing that really counts is: Will the problems hurt stock prices now?"

—"Fear of Falling," March 16, 1992

"The nature of corrections is they come at you out of the blue and last ten days to two months. They cost most stocks 5% to 10% and disappear as quickly as they came, yielding to the next up leg of the market. You can't really protect against corrections, and they aren't really worth worrying about."

—"Going Up," May 11, 1992

The geopolitical winds of change were blowing hard in 1992. Just days before the start of the year, the Supreme Soviet formally dissolved the Soviet Union, ending the Cold War. A bit farther west, the European Union (EU) was founded with the signing of the Maastricht Treaty.

But all wasn't well across the pond. Before the EU was formed, most major European countries joined the European Exchange Rate Mechanism (ERM). The purpose of the ERM was to maintain stable currency exchange rates within Europe. Unlike today's European Economic and Monetary Union (EMU), countries in the ERM had their own currencies and monetary policies, but they agreed to heavily manage their currencies' exchange rates to keep them within narrow bands. The UK was reluctant to join the ERM, but finally did in 1990. This was until Black Wednesday (September 16, 1992) when, after raising ...