Market Analysis

Ken Fisher Reuters Interview: Markets Grinding Through Fears

In this Reuters interview, Fisher Investments CEO Ken Fisher says the markets want to grind through the fear of what happened in the terror attacks and what will happen with the interest rate hike.

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Video Transcript:

Shartia Bartley: US stock indices moving higher today and are on track for their best weekly performance since October. Let's discuss this and more with Ken Fisher, CEO of Fisher Investments. Ken, thank you so much for joining us.

Ken Fisher: Thank you for having me.

Shartia: So what's moving the markets today?

Ken: There's a bull market that's still recovering from the downturn that it had from the summer. And fundamentally, what it's wanted to do is grind through fear- so it's grinding through the fear of what happened with the terrorist last week, it's grinding through the fears of what will happen with the interest rate hike, which will be a non-event because it's one of the most pre-discounted things in the whole wide world. This isn't going to surprise anybody. The only people who don't know about this are in the upper Amazon base and rapidly fling humanity, and therefore it's just wanting to grind up.

Shartia: You mentioned you think it's a wide conclusion that the Fed will raise rates in December. Do you agree with that move if they choose to do so in December?

Ken: I don't like the Fed. I've never liked the Fed. The fact of the matter is these people do stupid things all the time. And they would do better - which they won't - to just simply tell us long in advance what they're going to do, be transparent and then do it, and not play all this game of hide-and-seek. But they love the intrigue of it and they're- they think they're cuter than they are, and they would've done better to raise interest rates much earlier, and to have told us about it further in the past than that, and it'd be transparent and simple. But they can't quite keep themselves on that.

Shartia: Interesting point there. Let's go back to- you mentioned the Paris terror attacks, and then we had this situation going on in Mali right now- why haven't the markets responded, I guess, adversely to that today?

Ken: Never do. Markets never react terribly to terrorist attacks. The fact of the matter is we have a long history of terrorist attacks and they have no long-term impact on markets ever, and mostly there aren't many short-term impacts. If you take for example 9/11, which was huge compared to anything else that we've seen, if you look at the market simply 30 days later, it was higher than it was before 9/11- a point that people forget. That is there was initial part where they closed the markets and that freaked people out and the market plunged immediately, but 30 days later the market is higher. And of course that was in the middle through- that was in the process of your market that it already started. Terrorist attacks are a small part of the world- they're terrible, they're tragic, they're cruel, they're abhorrent, but a little bit like shifting to a different concept when you had the problems of Hurricane Katrina in New Orleans. Markets didn't go down. To get the market to really go down, you need to be able to whack the economy. To be able to whack the economy, you need something that's going to take our $65 trillion- $70 trillion global GDP - since countries in aggregate are positively correlated - and knock it negative from its normal 2%, 3% growth rate, which is you need something that's a multi- trillion Dollar negative knock that wasn't previously priced into markets. Terrorist attacks are little compared to that, not big.

Shartia: Okay, so looking at volatility going forward.

Ken: I like it.

Shartia: Should we expect more of it in the near term?

Ken: I hope so. I love volatility. People think of volatility wrong. They think of the market as like when it's up, it's good, and when it's down, it's volatile. But volatility is a dual-edged sword and you do not get up a lot without volatility. Both are volatile- there's the volatility the pleasant kind and volatile the unpleasant kind. And we're in a bull market, so what we've had is markets that have been terribly up. What I'd like to see is some volatility on the upside.

Shartia: So what are you advising your clients right now?

Ken: Have a good time. There's a bull market- enjoy it. Don't over-think it, don't try to be too cute- try to keep it simple and straight, not in the middle, late in a bull market and the last third of a bull market- the last half of a bull market, the market increasingly wants to focus itself on companies - not that necessarily have a high growth rate or a low growth rate - but have a growth rate that's predictable long out into the future. Quality long-led procession to growth.

Shartia: Alright, we'll have to leave it there. Thank you so much, Ken.

Ken: Thank you.

Shartia: That's Ken Fisher, CEO of Fisher Investments. I'm Shartia Brantley. This is Reuters.