Yes, The Markets Are Volatile--That's A Good Thing

You don't get up-a-lot markets, big moves fast, without abundant gyrations.

This story appears in the September 28, 2015 issue of Forbes.

Recent volatility causes most to question the bull market’s viability. But I like it. Stocks have been too nonvolatile too long, and I love volatility. Most folks think when stocks are up, it’s good, and when they’re down, it’s “volatile”–but you don’t get up-a-lot markets, big moves fast, without abundant gyrations.

In contrast, the age-old saying almost always holds true: Bull markets die with a whimper, not with a bang. Bears start slowly–boringly down for a long time, lulling in last-minute-virgin, greater-fool buyers and then sucking them under. Big-bang scares that occur close to peaks typically mark correction behavior within bull markets.

Corrections come for any reason or no reason, and they’re typically short, sharp and banner an overburdening story that soon sounds very wrong. This year’s model reminds me of 1997′s (and at the same time of the year!): emerging-market- and currency-oriented, with the developed world as the bastion of relative strength, coupled with weak commodity prices and flattish interest rates. All you need to do is replace O.J. Simpson with Bill Cosby as the pop culture villain du jour.

This seems big because we aren’t hardened to recent volatility–like in 1997. Since we haven’t had a real correction in years, this isn’t so shocking. Often we get one or more a year. After 1997′s came 1998′s. We may get another next year. They’re normal to big bulls.

Bears have long warned that it’s been oh-so-long since we’ve had one, so you should beware. They can’t cry wolf on that anymore. That’s good. Anything can happen, but you should expect this bull market to raise its tenacious head again soon, bucking off all the fears skeptics can hurl at it. Keep owning the kinds of stocks that thrive in maturing bull markets.

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Disclosures

Ken Fisher has written the Forbes magazine “Portfolio Strategy” column since 1984, making him the longest continuous running columnist in Forbes' history. During this period, he’s made significant market calls—many in direct opposition to Wall Street’s consensus forecast. Though no one can forecast the stock market with absolute certainty, we believe Ken’s record of correct market calls is unmatched by most. We encourage you to examine Ken’s complete Forbes record for yourself. To access Ken’s Forbes “Portfolio Strategy” columns dating back to 1997, please visit www.fisherinvestments.com/market-insights/investing-articles/forbes. For columns prior to 1997, please contact us directly and we would be pleased to provide them upon request. 

Investing in stock markets involves the risk of loss. Past performance is never a guarantee of future returns. Not all past forecasts were, nor future forecasts may be, as accurate as those presented herein. Ken’s Forbes forecasts should not be regarded as a reflection of the performance of Fisher Investments or its clients. Any mention of a particular security is not a recommendation to buy or sell that security. Rather, it is intended to illustrate a point. No assurance can be made regarding the profitability of a security mentioned.

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