Clarity is an Expensive Thing to Wait For!
"Clarity is one of the most expensive things in the world to wait for. People have a perverse desire to buy high, sell low," Fisher said.
Fisher basically backs our thoughts but of course managing $40B allows him alot more interview time. His biggest point that we've pounded the table on for a long time is the interest rate spread. A large yield curve typically generates economic expansion. Its becoming very apparent that this time is no different.
Its also interesting how he highlights another typical issue of a market: fixation with the last markets winners. Whether the naysayers that correctly called the downturn or an asset class such as bonds. In both cases, investors are missing the current bull market in stocks and ignoring the winners. You can follow the last markets winners. Always look for tomorrows champoins.
In summary, Ken thinks this isn't 1932 so the markets should rally in the 2nd year after a recession. So far he is right because the rally since March 9th has been strong.
- markets have failed to take into account the big spread between short- and long-term interest rates, a classic indicator of an economy on the verge of recovery.
- Investors and the broad public do not view optimists as heroes and are fixated on the downside, failing to see all the signs that the global economy is doing very well, he said. Who was right calling the bear market garners more attention than who was right calling its end.
- Data shows that since the late 19th century the total return of stocks, which includes dividends, has always gained in the second 12 months after a bear market has bottomed, he said.
- On a price-only basis, stocks failed to gain in the second 12 months after the trough only once, in 1932, he said.