Ken Fisher on What to Expect in 2019 | Fisher Investments


WHAT TO EXPECT IN 2019
KEN FISHER So, when I look at 2019,
I say the following things. I look at specifics of what’s going on
in the world, and then, I think about history. Let me just make some points. The aftermath of bear markets
is huge upside. The aftermath of the average correction, in the history of the S&P 500
going back to 1926, is 12 months moving forward, then on a price-only return,
is 34% in 12 months. When you take all the calendar years
that have been up 5% to down 5%, that bandwidth of up a little
to down a little, the average subsequent calendar year
has been up 24% total return. The period that we’ve been through,
normally, would lead you to strength, but of course that’s just historical,
and this time could be different. When I look at the world now,
I can say the following things. I can say GDP weighted global loan growth
is very strong at 7%. The broad quantity of money is growing
at about 6.5% in a world where real GDP inflation adjusted
is growing at about 2%. That means there’s a lot of
excess stimulus in that money growth. It’s not so much coming out of America,
as coming out of the world. When I look at
otherwise fundamental features, the wiggles in the economy as a whole,
which frighten some people right now because there’s been some downside wiggle, are the same magnitude as we have seen many times before in this long expansion. I have made a big point about the fact,
and other have too, which makes me a little bit afraid of it, because whenever others agree with me,
I don’t like it, but I’ve made a big point about the fact that this is to be the third year
of a president’s term. We haven’t had a negative third year
of an American president’s term in the S&P 500 since 1939, which was only down nine-tenths of 1%
as World War II was starting. The third year of a president’s term is,
in American political history, a kind of a sweet spot that overlaps a lot
with what I’ve otherwise referred to in my writings as the “91% miracle,” which tends to have the quarters following
a midterm election, tend to move positive, even over the nine months, 91% of time,
even if one of the quarters is negative. I do believe that 2019
will see a strong year, and therefore, I’m pretty optimistic,
and I think a little bit going back to Franklin Roosevelt’s famous saying,
as we look right now, right here at 2019, in the middle of December,
that the only real thing to fear is the fear we all have ourselves.

Paul Whisler

7 Comments

  1. I agree with you Ken we shifted back into U.S stocks Friday, including putting some margin to work while maintaining a 40% concentration in Asian and Europe developed. I think China will return the most this year, but U.S should do well from here as well. Risk vs reward seems geared towards upside especially now that Powell has seen the realties on fear per recent rate hikes.

    Want to conclude we follow your channel, love your books and other than Warren we have applied your investment guidance the most. Especially Beat The Crowd that book made us a contrarian investor and it’s worked out well over the past decade. Look forward to your content from here.

  2. Again….what happened to the 87% Miracle you always talk about, Ken???? Thank You, Sean M, Lakeville MA

  3. Good video KF. Always alarms me when too many pundits agree with you. Quite a few in the financial media were following your line on the historical post mid-term/3rd year of presidency. Hopefully this deep correction will have shaken some of the certainty and conviction that's been building throughout the faux Trump rally. At this point sentiment is nicely dour during the faux Trade + Fed correction/bear.

  4. Sorry. Almost 10 years of a Tremendous Bull run since 2007-2009 Financial Crisis will have all the major institutions working hard to book their gains, bring the markets down, then they can Buy into The Next New Economy, in things like Blockchain, Electric Car Related, A.I. Related, Alt Energy, and Base Economic Fundamentals. The Institutions stand to gain by realizing their profits now instead of playing with the possibility of more fall out later. Its right in front of our eyes in the long term charts, and all retail traders are not wanting to loose their money again to the powerful market driving institutional investors. Institutional traders can take the market down, buy in and reposition cheap in 2 years and feel relatively secure that they can reset the climb for another 5 maybe even greater than 10 years, for another great bull run. The S&P 500 will need to bear down to around 2100 over the next 1.5 to 2 years, the DOW will need to Bear Down to 18,000 level, and will over the same time period, since also-trading/investing has correlated everything to act all together, and the NASDAQ will Bear Down to around the 5125 levels, again over the same time period, again, because the fun of Human Only Markets have succumbed to Super Computing Algorithmic Investing/Trading. Time will tell if I'm wrong or Right.

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