Personal Wealth Management / Expert Commentary

Ken Fisher’s Outlook on Tech Stocks

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his outlook on tech stocks. Ken explains an unseen truth in 2022: Tech stocks’ performance, as with growth stocks overall, has overwhelmingly correlated with the market’s direction. On days when markets are down, tech goes down more. On up days, tech goes up more.

Historically, categories that drop the most during a bear market tend to bounce the most when the subsequent bull market begins. This period can last several months. According to Ken, these and other indicators suggest tech stocks are likely to outperform in the early phase of the next bull market.

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Ken Fisher: So, let me just be real clear. My views on what's ahead for technology are quite in contrast to that of most people that you would read about or hear.

I think the big, unseen truth of 2022 is that markets have had one powerful feature, movement of tech and in fact growth stocks overall, has correlated overwhelmingly with direction of market.

Ken Fisher: On days when the market’s down, tech goes down more.

On days when the market's up, tech goes up more.

The correlation there, depending on exactly what you're measuring, runs mid 70s into low 80s.

The fact of that said differently and simply, is you tell me if the market's going up or down and I'll tell you over, let's say over two weeks, I'll tell you whether tech leads or lags. In history, when we've had bear markets, there is another overwhelming tendency that that which drops the most, bounces the most, into early phases of the subsequent bull market.

Ken Fisher: Of course, that varies slightly cycle to cycle, but on average, has lasted about eleven months, almost a year, sometimes a little shorter, sometimes a little longer, which you would expect.

What does that mean?

That means when we get to the bottom, whenever that is, you should expect to see tech because it's been

lagging because we've had more down days than up this year, which, you know, by definition, since we've had a down year in 2022 through the middle of the summer, you should expect to see it leading once we hit that bear market bottom and start on the other side.

I don't want to argue with you in

this video about direction of the market.

Ken Fisher: I do want to say once you get down this far into a bear market, it is not terribly long in time until you normally get to a bottom.

We can debate what that is, but once you get to that bottom, you should expect to see tech leading for about

the next year and therefore maybe longer, but for about the next year and therefore we should be seeing most of the next year led by tech going up.

I want to step back and reiterate, market down, tech down more, market up, tech up more.

The correlation to that is so high

and yet not widely perceived by people.

I've not seen anything stated

on this in public anywhere.

But it's a simple unseen fact and facts are stubborn things and the stubbornness of that ripples over into this feature that I just articulated which what falls the most

in as categories, not individual stocks categories, falls the most in bear markets bounces the most for a good long time coming off the bottom.

And you should expect that with tech as we hit a bottom when we hit a bottom.

Thank you very much for listening to me.

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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 Investments 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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