Personal Wealth Management / Expert Commentary

Ken Fisher Examines Where Investor Sentiment Stands Going into 2022

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher considers investor sentiment—how investors are feeling about markets—to be one of the most important factors influencing markets.



Title screen appears, “Ken Fisher Examines Where Investor Sentiment Stands Going into 2022.”

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Ken Fisher: A valid question always is where investor sentiment stands. Because as I cite over and over and over, Sir John Templeton's legendary line that bull markets are born on pessimism, grow on skepticism, mature on optimism, and die of euphoria is a piece of permanent wisdom.

Ken Fisher: And as we've moved from a world twelve years ago with tremendous fear and pessimism of all things, irregularly forward into a world that at the beginning of this year, as I've said, was beginning to bite onto the early stages of euphoria, the concern about sentiment is a valid one. But in fact, since about March, while we've had a stock market that up until about a month ago was rip roaring and over the course of the last month is kind of wiggle sideways, we see sentiment actually having backtracked fairly significantly.

 Ken Fisher: A lot of the features that were heavily beginning to get a little bit scary have backed off the huge surge that had occurred and set all time records in special purpose acquisition funds, which is sort of a tricky way to do an alternative and initial public offering. The move toward non fungible tokens, which are these bizarre ways to have something be traded at a very high level, supposedly backed by some form of crypto and crypto itself in the spring spiking to record pricing these and other signs.

Ken Fisher: For example, early in the year, surveys from institutional investors showed most institutional investors expecting to see mildly higher prices year ahead. Now of course, stocks have done much better than that, so they were wrong about that. But now we've seen a world where they actually expect lower prices by the end of the year and they're almost always wrong.

Ken Fisher: So, you should see that as a positive sign. The back off in special purpose acquisition offerings, both in terms of some that blew up and others that were stalled off from regulatory concerns and in fact regulatory concerns not just from our government but also from foreign countries, have led that as well as crypto to become more, if you will, down to earth. All of these are actually signs that sentiment is backed off. John Templeton's line is a good one, but the move from pessimism to a bull market's euphoria is not a straight line, it's a wiggly line.

Ken Fisher: It's a wiggly line a little bit like the stock market's wiggly. And what we've had since March is that wiggling back into an area that's now clear optimism. But we're clearly not. At Euphoria we've got numbers of things that people wrongly associate with fear. A fear, for example, about what's gone on in Afghanistan, which is a true human tragedy. It's a humanitarian tragedy, but it's the kind of thing that doesn't really impact capital markets. Capital markets just don't.

Ken Fisher: Capital markets are cruel, mean, noncaring and literally things like that. We have a very long history of them in different forms. Markets don't care about that. Things like the Delta variant and fears about other future variants of COVID causing slower growth when before people thought we were off to the races in a long boom. This also was an optimism. That was always a false optimism because as I've said from early in the year, what we really did was had a fairly strong upturn that was moving us back toward normalcy.

Ken Fisher: But then we hear people say, and there's some validity to it, that what's gone on with COVID has put restrictions in varied ways in varied places that has impacted some of the small retailing, some of the hospitality industry, negatively impacted some other parts of travel and that's all true.

Ken Fisher: But those features, all of them in aggregate are a tiny, tiny, small percentage of the US or global stock market ranging in the area of about 2%.That is, that which is impacted is 2%.So that tells you why it is that those things which get a lot of attention in media don't have any real ripple over effect into the stock market. These features have moved us back into what I would call an area where sentiment now having wiggled backwards a little bit from where it had been, now has room to run as we move into the next leg of this long bull market.


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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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