Billionaire Fisher lambasts dour sentiment, eyes bull market

By Herbert Lash

NEW YORK (BestGrowthStock) – Sentiment may be sour but a bull market in U.S. stocks (Read more about the stock market today. ) that roared in September has more upside, according to billionaire investor Ken Fisher.

The drop in risk aversion after U.S. mid-term elections is typically good for markets, while Iran poses the biggest potential headwind to equity markets, Fisher said on Wednesday.

The U.S. election calendar provides a fairly predictable cycle for stock markets, Fisher said. The year after mid-term elections is usually the most risk-free because politics subsides before the ramp-up to the presidential race, he said.

“The six and 12 months after mid-term elections have always been positive because political risk aversion falls and when political risk aversion falls, total risk aversion falls,” said Fisher, who oversees $37 billion in assets as founder of Fisher Investments in Woodside, California.

“The biggest risk to markets are the issues that relate to geopolitics,” said the veteran columnist for Forbes magazine. “The real issue is Iran and Iran is scary. Iran could blow up at any time, and is a real problem.”

Fisher is bullish on stocks, and pans the worry warts who fret the economy is poised for a double dip recession or subpar growth at best. Bull markets occur after recessions, and the bull market that ended in 2007 was cut short, never reaching the euphoria marked by a mad rush into stocks, he said.

“The notion that equities are terrible is widely perceived today,” he said. “Most bull markets culminate with some amount of over exuberance toward to stocks. In 2007 we did have that. We had a bull market that was truncated.”

Fisher finds that Wall Street is consumed by false assumptions about investing, a notion that is the theme of his latest book, “Debunkery.”

All myths, Fisher insists. Take the adage “don’t fight the Fed,” which holds lower interest rates are good for stocks and vice versa as the Federal Reserve tightens monetary policy.

The Fed raised rates from 2004 through 2006, a good bull run for stocks, and cut rates for the rest of the decade, periods that have often has been bearish.

Another Wall Street myth Fisher pours salt on is the axiom “sell in May and go away,” lore that is almost as widely propagated as the advice to “buy low and sell high.”

Since 1926 through last year, May has averaged a return of 0.38 percent. Not the best, but better than September and February. But the summer months of June, July and August have returned 4.51 percent, the best three consecutive months.

“Debunkery” is Fisher’s seventh book. He said writing books crystallized long-term ideas, provides an outlet for what he feels people need to hear

Fisher is overweight international stocks, with his picks roughly equally divided between developed and developing economies. That puts a big emphasis on emerging markets.

Unlike recoveries of the past, developing economies are leading the world out of recession instead of the United States.

For example, Fisher likes airlines and utilities in emerging markets, stocks that typically are viewed as death traps or stodgy investments at best in the developed world, because they’re great growth stories in developing economies.

He cited the planned merger announced in August of Chile’s LAN Airlines SA (LAN.SN: )(LFL.N: ) and Brazil’s TAM (TAM.N: )(TAMM3.SA: ).

Fisher caters to high net worth and institutional investors. A typical portfolio at Fisher Investments returned 15.3 percent in the third quarter, compared to a 13.8 percent gain in the MSCI world index.

(Reporting by Herbert Lash)

Billionaire Fisher lambasts dour sentiment, eyes bull market