As the Dow Jones Industrial hits a record 15,000, it’s time to take in the view, and read a little perspective from the folks at Fisher Investments – Matt Goldhaber, VP, Fisher Investments
The Dow crossed 15,000 earlier this week and headlines (seemingly on cue) bemoaned the disconnect between market highs and what’s so far been seemingly just ok economic growth. Others, too, chimed in with arguments justifying fears of new market highs and bubbles. Of course, we’ve panned the price-weighted Dow as a poor proxy for broader markets myriad times, but what of the S&P? It surpassed its past highs recently too—and broke through 1600 days later. Scary! But should it be?
Acrophobia—the fear of heights—is fairly common and has been around for a while. Not since we swung from the trees have most of us been good with heights. Our survival instinct kicks in and tell us high places, like mountain (or stock market) summits are bad places for us to be if we want to see tomorrow. With mountains, the fear is easily justified—our ability to independently sustain flight is pretty limited. With markets, the fear is a little harder to assess—it’s rooted in the fact we hate losses more than we love gains—myopic loss aversion. But markets, specifically bull markets, don’t share our earthbound proclivities. More often than not, they push past previous highs and keep rising for months and more frequently years—well-eclipsing past records. Was the S&P “too high” when it regained its prior peak of 370 on March 1, 1991? Or when it surpassed 142 on November 3, 1982? Of course not. Hindsight gives us perspective, and those two bulls ran for about nine and five more years, respectively, setting dozens of new highs along the way. The index level—record high or no—isn’t predictive of anything. It’s just a number. But foresight requires us to question market acrophobia and fears squawked about in headlines with a little more scrutiny to determine where the market’s headed. Full Story: http://www.marketminder.com/a/fisher-investments-assessing-acrophobia/26d0f098-4407-4140-a3bc-1333c2c877b8.aspx
Todd Bliman, editor at Fisher Investments MarketMinder, takes a good look at Ben Bernanke’s quantitative easing program and its effects on the economy and lending. – Matt Goldhaber, VP, Fisher Investments
QE’s Theoretical Foible in One Lesson
In every trade, there’s a buyer and a seller. Similarly, in every loan, there’s a borrower (debtor) and a lender (creditor)—a pretty basic lesson, to be sure. But it’s one that’s often overlooked in discussion of what the Fed calls its “extraordinarily accommodative monetary policy“—essentially, quantitative easing (QE). Understanding this clearly is key to assessing the outcome of a potential end to QE.
For the better part of the last five years, Fed Chairman Ben Bernanke’s stated mission has been to pin borrowing costs low—providing, in his view, an economic stimulus by making borrowing cheaper. Bernanke seems to believe the animal spirits (or confidence) of the borrowing public need to be stirred. He figures cheap money is the elixir to awaken the urge, financing home purchases, promoting business investment and spurring consumption in general. And, in part due to his efforts, money is cheap! Ten-year government bond rates are presently 1.86% (as of March 28, 2013) and 30-year conventional mortgages will run you a paltry 3.94% today. That latter figure means a $1,000 monthly principal and interest mortgage payment will support a loan nearly three times larger today than it did in the early 1980s. Read More At Investor’s Business Daily: http://news.investors.com/investing-fisher-investments/040113-649909-qes-theoretical-foible-in-one-lesson.htm#ixzz2PtEqq3Tn
Learn what Forbes columnist and Fisher Investments CEO Ken Fisher has to say about 2013: – Matt Goldhaber, Vice President, Fisher Investments
By Ken Fisher, Forbes.com, 1/23/2013
This story appears in the January 21, 2013 issue of Forbes.
Negatives continue to abound. So why do I expect stocks to shine in 2013? Because I’m not a cow, I’m a bull. Let me explain: Most negatives you hear about are well known and widely discussed, digested and already priced into stocks
Looking back on 2012 with some insights from Fisher Investments MarketMinder – Matt Goldhaber, Vice President, Fisher Investments
Eight Things that Didn’t Happen in 2012
By Fisher Investments Editorial Staff
For most folks, it’s easy to remember the big events that happened in a given year. A bit harder is remembering those things most folks fretted, but never came to fruition. So with 2012 in the rearview, we present our list of things that didn’t happen.
A sudden eurozone splintering
For much of the past three years—2012 being no exception—many feared a sudden eurozone disintegration. There’ve been myriad variations on the idea: stronger countries leaving the euro, weaker ones being forced out, two monetary units, etc. All the same, the fear didn’t become reality in 2012 as European leaders continued to do what was necessary to keep the monetary union intact—albeit often at the last possible minute. The eurozone still isn’t out of the woods, as some countries have myriad issues to resolve, but European leaders and the overall populace have shown tremendous resolve to prevent a disorderly breakup in the immediate future and commitment to maintaining the euro in its current form—at least for a good long while. (For our a far-reaching collection of our thoughts on the eurozone, click here.)
A US recession
It’s been fully three and a half years—42 months—since the last recession ended in June 2009. Yet throughout, many continually fretted a recession immediately in the fore, or at least an economy growing at a snail’s pace. The first half of 2012 was slow, true, but Q3 2012 GDP clocked in at a swift 3.1% q/q annualized, marking the 13th straight quarter of overall growth. What’s more, GDP was already at new all-time highs prior to 2012’s start and keeps building on those highs.
While government spending and other GDP measures have varied (often considerably) quarter to quarter, consumption (the largest component of GDP) has been overall resilient and the private sector strong. True, there are still pockets of weakness in the economy (nearly always are), but overall the stronger parts continue to pull along the weaker—something that doesn’t look to be changing anytime soon.
For full story, and the other six things that didn’t happen in 2012, check out the full article at MarketMinder.com: Eight Things that Didn’t Happen in 2012
In the spirit of the holidays, Ken Fisher looks at capitalism as a source for societal good – Matt Goldhaber, Fisher investments
Ken Fisher: Capitalism as a Source for Societal Good
By Elisabeth Dellinger
With the holidays approaching, the season’s merry music is all over the radio. My favorite: Band-Aid’s “Do They Know It’s Christmas?” in which a who’s who of early-80s alt-rock implored us to “Feed the world—let them know it’s Christmas time.”
Alas, 28 years later it’s clear music can’t feed the world’s 925 million undernourished people. But a force way more powerful can, if given the chance: free markets. When it comes to feeding the world’s starving, to quote my boss Ken Fisher, “I believe in capitalism.”
Don’t buy it? Consider India, where over 200 million people are undernourished. Indian farms produce enough food to feed all of the country’s 1.2 billion people, but around one-third of it rots before it reaches the market. Outdated harvesting means and storage capacity, unpaved roads and a lack of refrigerated trucks keep over 200 million people from getting enough to eat.
To fix this, India doesn’t need subsidies or charitable aid—it needs investment in food supply chain infrastructure. But several administrative and regulatory bottlenecks limit a flood of domestic investment, and protectionism has long prevented foreign investment. Attracting foreign investment would require letting in foreign supermarkets, which many fear would make life harder for the corner shops and market stalls that dominate Indian retail. So for the sake of protecting domestic commerce, India effectively barred foreign money and forced the supply chain to remain decades behind the times. Starvation persisted.
Read More from Elisabeth Dellinger and Ken Fisher at IBD: http://news.investors.com/investing/121212-636787-ken-fisher-capitalism-as-a-source-for-societal-good.htm#ixzz2Ewr74DFs
You may find interesting this note from Ken Fisher published in a recent Financial Times article regarding the impact on the equities markets of the impending Fiscal Cliff:
Ken Fisher on the Looming Fiscal Can-Kick
As debate continues swirling over the presumed-slope-that-is-mostly-a-budget-debate also known as the “Fiscal Cliff,” a few details have been trickling out regarding the state of negotiations between Republicans and Democrats. The fact finding and wrangling sheds an interesting light on how the debate is evolving—and how strong the motivation actually is to strike a deal. In a recent Financial Times article, Ken Fisher (CEO of Fisher Investments) discussed how this debate is affected by the looming 2014 midterms. Here’s some more detail on the political pressures likely driving a fiscal compromise.
Read Ken Fisher’s full story here: Equities.com
– Matt Goldhaber, VP, Fisher Investments
Elections are coming – Fisher Investments comments on upcoming November elections that may impact the global economic outlook. — Matt Goldhaber, Vice President, Fisher Investments
That Other November Election
By Fisher Investments
NEW YORK (TheStreet) — This November, a very important election will take place. The result, many say, could determine the fate of one of the world’s biggest regional economies.
You might think we’re talking about the U.S. presidential election, but we’re actually eyeing a different contest: Catalonia’s regional elections, scheduled for Nov. 25, which are already being touted as the latest “critical day for the eurozone.”