Bear market pessimism leads to the next bull market, says Fisher Investments CEO Ken Fisher.
Not only is the bull already here, it’s got a long way to run, he says.
“Bull markets go longer than people think they can and keep running,” Fisher told Dan Mangru of Newsmax TV.
“We have years ahead of us.”
Fisher advises investors to choose sectors that did well during the first half of the last bear market but got crushed in the second half because they tend to lead the next bull.
Just be very sure they did well in the first half instead of doing badly overall.
“You want the part that got crushed at the end, where you get the most value,” Fisher advises. “Fundamentally, they were doing fine as businesses, as categories.”
“In this case, this would be materials, industrials, energy, technology.”
Exchange-traded funds (ETFs) are cheap and efficient, helping investors sectors to buy into sectors and countries that might otherwise be outside their reach, Fisher notes.
Unfortunately, they don’t allow for single stock selection, he says.
“I’m a big believer in ETFs, but I also think they’re a limited tool,” he says.
ETF investors should first determine what country, industrial sectors, and categories they want to own, then make certain the funds they buy don’t charge high fees.
“The broader the mandate, the cheaper the fee,” Fisher notes.
“You actually use ETFs most expeditiously when you have big, broad mandates, not when you have the desire to hone in on a little tiny place.”
The totality GDP of emerging markets outstrips the United States, Fisher notes, and investors are well-advised to consider investing in them using the categories mentioned above.
Over the next couple of years, Fisher expects China will do especially well.
Speaking on his new book, “How to Smell a Rat: The Five Signs of Financial Fraud,” Fisher told Mangru that “financial fraud isn’t going to end...because criminals have always been with us.”
“Rats are ubiquitous, and people need to protect themselves.”
Though he acknowledges that inflation is always a concern, Fisher thinks it’s probably a smaller problem than many of us fear precisely because we spend so much time worrying about it, a factor tends to be priced into securities.
“The things we don’t worry about that are negative are the things that hurt us the most,” he points out.
Fisher stresses that falling bond prices and rising interest rates, particularly for corporates, are a bad sign.
He suggests that people who want to buy individual stocks read his Forbes magazine columns, where he mentions a handful of his top picks each month.
“We have such an overwhelming opportunity in a bull market to do well with single securities,” he says. “Own the stocks. It’s a great time.”
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