Personal Wealth Management / Expert Commentary

Fisher Investments Reviews What New All-Time Highs Might Mean for Investors

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses the recent all-time highs of several stock indexes and what’s ahead for equities. Ken explains that after setting new all-time highs, stocks typically continue to rise—often by a fair amount. According to Ken, political tailwinds and the current state of sentiment point towards a continuation of the bull market in 2024.

One challenge many investors face as ascendent bull markets approach new highs is what Ken calls “breakevenitis”—the temptation to exit markets around the “breakeven” versus risking potential future loss. Ken believes “breakevenitis” is never the right way to think about your portfolio. Instead, Ken says investors should consider what is most likely to happen in the world over the next 3 to 30 months and invest accordingly.

Transcript

Ken Fisher:

So, when you get to a time like we are now, where, globally and here in America, stocks are hovering just below all-time highs, albeit not on an inflation adjusted basis. A little bit lower there. People often ask me and are asking me now, what does that say about what's ahead?

Now I'm going to make the following point. It's overly simple and it's not perfect. And the point is that when you've had a bear market like we had in 2022, it wasn't a big bear market, it was a little bear market. And it was a bear market unlike most because it didn't accompany an actual recession. Normally, bear markets precede recessions. But we had the bear market, depending on where you were in the world it ended between June and October of 2022. And then we had an ascendant bull market.

When you actually get to that ascendant bull market, it almost always gets the new highs. Maybe not inflation adjusted highs, but almost always new highs and usually inflation adjusted new highs and usually by a fair amount. So my point would be, we probably will now and that's consistent with my beginning of the year forecast, as posited in my January 1st New York Post column. I think we see a continued bull market this year. Less robust maybe than last year? Probably so, but still worthwhile, nonetheless.

That having been said, the fact of the matter is, it's also true that as we approach new highs or hover under them, an awful lot of people fear what's called "breakevenitis." They were at this level once before. Stocks went down, they felt terrible. They held on as if they were hanging on to a cliff. And then now they feel like if I just sell out now, I didn't really suffer a loss. Well, the fact of the matter is, that's never the right way, ever, to think about what you should do with your portfolio. What you should think about, what you should do with your portfolio is what's ahead. What's the world like 3 to 30 months out into the future? How are things going? What should you expect? What's likely? What's unlikely?

I'm going to refer you back to just some simple points. 2022 is a negative year in stock market. I just covered that. There was the second year of a president's term. 2024 is the fourth year of a president's term. When we've had second years of president's terms that were negative, tied to fundamental, basic things that I've talked about in other places and written about in other places, there hasn't been a negative fourth year of a president's terms since the bottom of the Great Depression in 1932. Every single one of them is positive. On average, 15% average annual returns.

The fact of the matter is, once we get so scared in a bear market, it takes us a long time to get over that fear. And going to the John Templeton legendary line that I cite over and over again. "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die of euphoria," and they rarely die any other way. They can, but it's very rare. The fact of the matter is, in my opinion, now we're hovering someplace between the latter stages of skepticism and the early phases of optimism. Because it takes a long time once we get into that pessimistic mode, to get back to euphoria. It takes longer than two years.

So, my suspicion is, and my bet is, my articulated views and where I write are that bull market continues through 2024 into 2025. What about after that? I don't know, I'll assess that when we get closer, but for now I think you should look for new highs. I think you should look for the bull market to continue. I think you should look for skeptics to be irregularly wrong, and you should look for a relatively good time.

Thank you for listening to me. I hope you found this useful and enjoyed it. Hi, this is Ken Fisher. Subscribe to the Fisher Investments' YouTube channel, if you like what you've seen. Click the bell to be notified as soon as we publish new videos.

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