Ken Fisher Examines Where Investor Sentiment Stands Going into 2022

Transcript

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A valid question always is where investor sentiment stands
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because, as I cite over and over and over,
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sir John Templeton's legendary line, that bull markets are born on pessimism,
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grow on skepticism, mature on optimism and die of euphoria is a piece of
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permanent wisdom.
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And as we've moved from a world 12
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years ago, with tremendous fear and pessimism of all things,
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you're regularly forward into a world that at the beginning of this year,
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as I've said,
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was beginning to bite onto the early stages of euphoria,
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that the concern about sentiment is a valid one.
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But in fact, since about March,
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while we've had a stock market,
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that up until about a month ago was rip-roaring.
1:01
And over the course of the last month has kind of wiggle sideways.
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We see sentiment actually having backtracked,
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fairly significantly. A lot of the features that were
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heavily beginning to get
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a little bit scary, have backed off,
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the huge surge that had occurred and set all time records
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in Special Purpose Acquisition Funds,
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which is a sort of a tricky way to do, alternative
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initial public offering.
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The move toward Non-Fungible Tokens,
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which are these bizarre ways to have some thing be
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traded at a very
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high level, supposedly backed by some form of crypto.
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And crypto itself and the spring spiking to record
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pricing.
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These and other signs for example,
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early in the year,
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surveys from institutional investors showed up,
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most institutional investors expecting to see mildly
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higher prices year ahead. Now of course, stocks have done much better than that.
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So they were wrong about that.
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But now we've seen a world where they actually expect lower
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prices by the end of the year, and they're almost always wrong.
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So you should see that as a positive sign,
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the back off in a Special Purpose Acquisition offerings,
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both in terms of some that blew up and others that were
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stalled off from regulatory concerns. And in fact, regulatory concerns,
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not just from our government,
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but also from foreign countries have led that
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as well as crypto to become more, if you will,
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down to earth, all of these are actually signs.
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That sentiment is backed off.
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John Templeton's line is a good one,
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but the move from pessimism to a bull markets,
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euphoria is not a straight line. It's a wiggly line,
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it's a wiggly line a little bit like the stock market's wiggly.
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And what we've had since March is that wiggling back into
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an area that's now clear optimism,
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but we're clearly not at euphoria.
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We've got numbers of things that people wrongly associate with fear,
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a fear for example, about what's gone on in Afghanistan,
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which is a true human tragedy.
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It's a humanitarian tragedy,
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but it's the kind of thing that doesn't really impact capital markets,
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capital markets are cruel mean non-caring and literally things like that.
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We have a very long history of them in different forms.
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Market don't care about that.
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Things like the Delta variant and
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fears about other future variants of COVID causing
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slower growth,
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when before people thought we were off to the races and along boom,
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this also was an optimism that was always a false
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optimism, because as I've said from early in the year,
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what we really did was had a fairly strong upturn that was moving
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us back toward normalcy. But then we hear people say,
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and there's some validity to it, that what's gone on with
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COVID has put restrictions in varied ways,
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in varied places that has impacted some of the small
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retailing.
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Some of the hospitality industry negatively impacted some
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other parts of travel and that's all true,
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but those features, all of them in aggregate are a tiny,
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tiny,
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small percentage of the US or global stock
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market ranging in the area of about 2%.
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That is that, which is impacted is 2%.
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So that tells you why it is that those things would get a lot of attention in
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media don't have any real ripple over effect into the stock market.
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These features have moved us back
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into what I would call an area where sentiment now,
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having wiggled backwards a little bit from where it had been now
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has room to run.
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As we move into the next leg of this long bull market.
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