Personal Wealth Management / Market Volatility

Ken Fisher Debunks: One Big Bear and You're Done

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher explains why one bear market shouldn’t ruin your retirement plans. Ken points out, with few exceptions, bear markets tend to be relatively short—typically lasting one to two years—compared to the duration of most investors’ retirement. According to Ken, as long as investors control their expenses and fight the urge to make significant portfolio shifts during negative volatility, one bear market should not cause irreparable harm.

Ken recognizes there has long been a notion of “one big bear and you’re done.” In his book Debunkery he explains how investors tend to think “things are different this time.” However, the power of capitalism and its ability to fuel innovation and overcome obstacles has always rewarded patient investors. Ken also reminds us that every market downturn has been followed by a recovery to new highs, noting that recoveries can happen quickly.

Transcript

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A man appears on the screen wearing a navy suit, sitting on a chair, behind him is a white screen with the title “Debunkery” 

He begins to speak.

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Ken Fisher: A lot of people say, boy, oh boy, if it's a bear market it's got to get a lot lower and oh, by the way, a bear market can destroy my entire retirement. Well, that's actually pretty ridiculous if you stop and think about it.

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On the white screen a title appears “DEBUNKERY” with subtitle “Seeing Through Wall Street’s Money-Killing Myths”

Ken Fisher appears back again in the same position.

ken Fisher doing hand gestures with a book in his hands time to time explaining. The books is called “Debunkery”.

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Ken Fisher: On June 13, we officially entered a bear market by closing below 20% off the highs in January, in that a lot of people say, Boy, oh, boy, if it's a bear market, it's got to get a lot lower. And, oh, by the way, a bear market can destroy my entire retirement. Well, that's actually pretty ridiculous if you stop and think about it, you agreed cannot control stocks, you cannot control where they go. You can control yourself and yourself is about all you can control in that the long-term history of the stock market includes all bear markets ever.

Ken Fisher: There have been a few very long ones but only a few ever. Mostly compared to your retirement, they're not very long, a year to two at the most. Some of them shorter, yes, some of them longer. But even there, as long as you control yourself, your expenses and your propensity to want to sell out at the bottom, there's no irreparable harm.

Ken Fisher: It's the feature that people don't think through, which is that the volatility of stocks, which includes the negative volatility that they dislike, coupled with the positive volatility that comes on the other side of a decline, of a big decline, that volatility is exactly central in economic theory to why stocks have that long term superior return.

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On the screen, a new chart appears, this chart is showing us Bull Markets: Longer and Stronger over the last 60 years.

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Ken Fisher: The fact is we have a very long history of stocks. We have a very long history. And in that there has always been this notion that one big bear and I'm done. And it's never been true, never. And it's paralleled to another thought that I wrote about in my book Debunkery, where this was the 8th debunk that I did and I actually brought the book with me to show you some of it.

Ken Fisher: But in this one a central argument has always been that tied to this feature, that feature, the other feature is not going to be the way in the future that it's been in the past. Capitalism will not be able to overcome the problems that we've had. It could be because of socio-political or other features. But in reality that view is not new and in reality that view has always been wrong and will be wrong now. The power of capitalism to create new, better, improved and to maneuver around the problems that we have with a little bit of time is simply awe inspiring in terms of the material well-being of human beings is the most blessed thing that's ever occurred to humans.

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Ken Fisher is reading from his book a text appears behind him highlighting what he is reading.

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Ken Fisher: So, I want to read to you briefly. Remember, the future includes as of yet unimagined earnings from currently unfathomed products and services born of boundless human ingenuity, innovation and desires from years to come not yet conceived. Always been that way. Forever, people have been moaning about stocks being too high and capitalism done. Fine, but every single time they've been proven wrong.

Ken Fisher: If you're betting with long term capital, I suggest you bet on the side of it and not betting against it. If any different this time, despite it always feeling different and the media always giving you countless reasons for why it is now and will be different, it isn't.

Ken Fisher: Just think in the last 20 years how many things you see and have that did not exist before. Whether it's delivery systems to your house with food, whether it's Zoom meetings that you had during COVID whether it's what's on your smartphone in so many ways even though you might have had a cell phone 20 years ago. They're pretty primitive compared to what you have today. The ability to keep coming up with new, different and better, and the beneficiaries of those often being firms that had nothing to do with their creation, but their utilization of them to do something else for consumers is simply awe inspiring. Often the popular conclusion is that social and political trends will overwhelm capitalism. That isn't a new view. Now, that argument is also pretty common right here, right now, in 2022.

Ken Fisher: There's a big portion of our investor world that thinks that, boy, oh boy, capitalism is under assault like it's never been before. And they kind of miss notions of things that have happened in our country and in other countries in the past, whether it would be in the ‘30s, or, or, or. Yet not always, but almost always in democratic nations globally, capitalism has ended up more powerful than politicians, social trends and temporary political will, and wins out in the end. So, I just want you this is chapter eight of my book, Debunkery, but I think it's important to note that the fact is that bear markets aren't that long.

Ken Fisher: The bounce back is usually not perfectly so, but relatively V shaped compared to the prior decline. The fact is that the tendency is always to think it's different, but in reality, while it's always a little different, it's never so much different to motivate you to a conclusion that says one big bear and you're done. It isn't true. It hasn't been true, and I absolutely believe that it will not be true. Thank you for listening to me.

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A half white half red screen appears.

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Ken Fisher: I very much hope you enjoyed this video as part of my series on Debunking Common Market myths.

To watch more videos like this, click the link on the screen and make sure to subscribe to Fisher Investments YouTube channel.

Thanks so much for listening to me.

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Ken Fisher finished talking, and a series of disclosures appears on screen:

Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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