See my posting from Friday here – Tom Faranda's Folly: The financial panic – my musings and also this where I quote money manager Ken Heebner. Tom Faranda's Folly: A savvy prediction by a money manager: "You're going to see the biggest short term rally in my lifetime"
Kenneth Fisher runs the biggest investment advisory firm in the country. He is also an author and has been writing a column for Forbes magazine for 24 years. I reviewed his last book here Tom Faranda's Folly: Latest read: The Only Three Questions that Count and in fact when I put a slightly modified version of the review up on Amazon, it became the #1 review of the book Amazon.com: The Only Three Questions That Count: Investing by Knowing What Others Don't: Kenneth L. Fisher, James J. Cramer, …
However, like everyone else, Fisher missed the pending danger in the U.S. markets (Not counting people who are permanently bearish) - he expected this to be a reasonably good year for stocks. His last Forbes column was September 1st, when the market had only fallen halfway to where it is today, and here is a link to it, with some excerpts below.
The stock market's drop since last November is enough to qualify it as a bear market. … Wrongly, I've been upbeat throughout.
There have been three other bear markets since I started this column 24 years ago: 1987, 1990 and 2000. This is the first time I haven't anticipated the fall. (See my columns of Oct. 5, 1987, May 14, 1990 and Mar. 6, 2000.) I hate that. I let you down.
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I also admit confusion. In my 36 years as a professional investor I have not seen a period like this. Investors are afraid, journalists are morose, and the same old stories keep replaying endlessly. That's not normal. In the world I've known most of my life, old stories quickly lose their power over capital markets and get replaced by new surprises. That which everyone fixates on gets priced into the stock market quickly and can't drag on. But here, 19 months after we first started hearing about subprime mortgages, housing woes and weak financials, the stories moving stocks are little changed.
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The fact is, the global economy isn't so bad. We have very low growth, with deep pockets of weakness, but last year's consensus held that the pockets would ripple out everywhere, and they really haven't. Slow, erratic growth continues. …
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To me it still seems more like a long, big correction than a bear market. But technically I'm wrong. Either way, what do you do now? Well, if you haven't gotten out yet, it's a bit late. Of the ten bear markets since World War II, six went down less than 30%. Another, in 1987, lasted just a few months. Now is nothing like 1968–70, 1973–74 or 2000–02, which were entangled with broad global recessions.
I'd bet we're most of the way through to the end of this bear market. And after bear markets end, the initial upswings come fast and steep. It would be risky to get out now and end up being whipsawed–that is, exposed to most of the decline but absent for most of the recovery. Now is the time for patience.
So with the benefit of being 6 weeks along, we know that Fisher was wrong in his estimation that the bear market is near the end and almost certainly wrong about where the global economy may be headed. But I agree with his point that it's too late to get out – the initial upswing should be fast. And Heebner, quoted in the first paragraph, agrees.
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