Worries about a looming economic crash keeping you awake?
Listen to Ken Fisher and get a good night's sleep instead. Unlike many investment managers, Fisher says the economy is doing just fine.
According to Fisher, who is CEO of Fisher Investments, the fact that the transport sector is doing extremely well means the U.S. economy is nowhere near a recession.
"Transports carry all the stuff," Fisher told Bloomberg. "As long as that sector remains high, we're shipping lots of stuff and don't have a weak economy."
"When we start having less usage of stuff in a recession, you'll see it in transport capacity utilization."
While many draw parallels between today's economic conditions and those of the Great Depression, Fisher notes that presently, central bankers are being accommodating, fiscal policy is stimulating, and regulatory response — at least so far — has been appropriate.
The result, Fisher says, is not a credit crunch, but a massive credit reallocation that has made credit both very cheap and available for large, high-quality borrowers — a condition that's especially bullish for the large cap stocks that now lead the market.
Investors shouldn't be afraid of investing in the market now, Fisher says, because the bull market has several more years to run. He especially likes the industrials and materials sectors.
"(Stock) prices aren't high," Fisher says. "They're just higher than they used to be."
Fisher believes the worst thing older investors can do is seek safety first by becoming more conservative in their investments as they get older. He observes that on average, today's 65-year-old investor will live another 20 years, and by the time today's 65-year-old reaches 85, life expectancy may well have gotten older.
"When I was 25, if you'd looked at the insurance assumptions as to how long I'd live after I reached 55 and then the same assumptions when I actually got to 55, average life expectancy had gone up seven years," Fisher observes. "In a 30-year period in my lifetime, I got one year extended life expectancy for every four years lived."
Future financial health, Fisher says, is far better served by investing in stocks, not moving 70 percent of your portfolio to bonds as you age. He points out that the only time bonds did better than stocks was in the 20-year period between 1929-1949 — stocks have outperformed bonds by a wide margin 98 percent of the time since 1926.
Add to that the fact that stocks remain extremely cheap relative to bonds, and that stock earnings yields remain above bond yields globally, and you come up with a compelling rationale for buying more stocks as years go by.
Older investors considering buying annuities should invest in a psychiatrist instead, Fisher says. "You're putting the salesman's kid through college. (Companies that sell annuities) just take your money and buy underlying securities, which you can do yourself."
Fisher also disputes the idea that tanking home prices will shut down the U.S. economy because there is very little historical linkage between home prices and consumer spending.
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