Personal Wealth Management / Expert Commentary
Ken Fisher Details Why Today’s Investor Headline Fears Are Bullish for Stocks
Ken Fisher, founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, says today’s headline fears—such as high energy prices, inflation and others—are actually bullish for stocks.
Title screen appears, “Ken Fisher Details Why Today’s Investor Headline Fears Are Bullish for Stock”
A man appears on the Screen Wearing a navy suit, sitting in front of a fireplace. He begins to speak.
A banner identifies him as Ken Fisher, Executive Chairman and Co-Chief Investment Officer, Fisher Investments.
Ken Fisher doing hand gestures time to time explaining.
An illustration of Sir John Templeton appears showing the market’s progression from pessimism, to scepticism, to optimism and then euphoria.
Ken Fisher: There have been a lot of increased fears just lately. Fears about all kinds of things, whether it's tensions with China, whether it's energy prices, whether it's fears of inflation and rising potential long term interest rates, whether it's fear about American political and legislative issues. Some people want these, some people hate these. You've got concerns that the economy is slowing down, you’ve got, you’ve got, you’ve got...
Ken Fisher: And a long time ago I wrote a Forbes column that I called a 'Fretometer'. And basically, I made the point that when you see lots and lots and lots and lots of things that 'suddenly start going ping, ping, ping, we're afraid of this, we're afraid of that, we're afraid of the other. That these are signs of sentiment cooling from a sentiment that's been a little too overly optimistic, and that these things, no one of which is actually overwhelmingly huge, but all of which make people feel like they're up against a wall of ping. Ping. Ping. Ping. Ping. Lead us to a world that takes away almost any form of what had previously been a concern, which is, are we moving toward Euphoria?
Ken Fisher: And expectations that are so high that no reasonable set of realities could possibly live up to those expectations.
Ken Fisher: But the pinging of the fretometer is a sign that those have gone away, dropping sentiment down into levels that today we can measure in lots of ways, including some formalized sentiment indexes that take you back down to the lower end of the spectrum of optimism, as lots of you've heard me say over and over and over again over the decades legendary, deceased, now wonderful man, Sir John Templeton, legendary investor, who, by happenstance, I shared his birthday just a different year after he had it first.
Ken Fisher: Sir John, you would say bull markets are born on pessimism, grow on scepticism, mature on optimism, and die of euphoria. And that's almost always true, except for some rare occasions when it's not. And once you get up into that higher level of optimism, it tends to limit the upside potential of the market. But when you get all of this kind of fretometer type concerns bringing sentiment back down to the lower level of optimism, it provides another leg to the bull market and a fair amount of time. And that's an optimistic thing that people don't recognize at the time as optimistic.
Ken Fisher: Most all these fears are ones that are widely bandied, very well known, and people can rarely accept in their bones that markets pre-price, all widely known information, fears, opinions, etc.... And that feature of that pre-pricing applies to almost every one of these. Some of them are actually false fears, things where you should think about them the other way around. You can look up on a Google search or whatever and see I've written a lot of things about why quantitative easing is regularly seen upside down and backwards. And the end of quantitative easing is a good thing, not a bad thing and is actually something that would help buoy the world. But people have some little fears of the tapering, of quantitative of easing that concept that fear is a false factor, fear of a false factor is always, always, always bullish. So basically, pretty much all these things as near as I can tell are either ones that are very widely priced and bringing down sentiment which is bullish or fear of false factor which is doubly bullish and therefore this process where we've seen sentiment drop, is actually a really good thing for stocks looking forward.
Ken Fisher: Thank you for listening.
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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