TRANSCRIPT

                         August 07, 2024

                           NEWS EVENT

                                

      KEN FISHER, FOUNDER AND CHAIRMAN, FISHER INVESTMENTS

                                

                                

                                

   FNC INTERVIEW WITH KEN FISHER, FOUNDER AND CHAIRMAN, FISHER
                             INVESTMENTS

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     FNC INTERVIEW WITH KEN FISHER, FOUNDER AND CHAIRMAN, FISHER
     INVESTMENTS

     AUGUST 7, 2024

     SPEAKERS:
     KEN FISHER, FOUNDER AND CHAIRMAN, FISHER INVESTMENTS

     NEIL CAVUTO, FNC ANCHOR

NEIL CAVUTO, FOX NEWS ANCHOR: All right, U.S. stocks ending lower when all was said and done, as the Dow logs its worst five-day start to a month since back in 2018. There are all sorts of ways you can analyze this.

Who better to do the analysis than Ken Fisher, the billionaire investor, of course, the brains behind Fisher investor -- Investments, the founder and chairman.

Ken, good to have you back with us.

What is going on here? Is it overdone? What do you think?

KEN FISHER, FOUNDER AND CHAIRMAN, FISHER INVESTMENTS: So, overdone is a hard thing to say ever about the short term.

This is a correction. It's not a bear market. It's very simple. Bear markets don't begin this way. The only time bear markets begin this way is when you have something truly extraordinary that no one's really thinking about, like the COVID lockdowns.

But, otherwise, there's a legendary saying, Neil. And thanks for having me back on. Bull markets end with a whimper, not with a bang. And it's been so long since we have had a real, classic, traditional bear market of size and magnitude that people kind of forget that.

This is straight off the top that was strong globally in the middle of July down. Intraday low, it was almost down 10 percent in 14 trading days, and now what looks like 17 trading days. This -- that's not the way bear markets begin.

CAVUTO: So let's get a sense of what drove this. Now, we're told this employment report last Friday really got the selling going. It was deemed a disaster because only 114,000 jobs were created. I guess they were expecting more.

But you and I can remember, in prior routs, they have been in response to much more perilous, where you have hundreds of thousands of jobs being lost. But that notwithstanding, then, we can't seem to find a footing here.

And I'm wondering, is it because of confusion over what the Federal Reserve has to do, whether this is just a natural correction in some overheated sectors. Technology comes to mind, some of these artificial intelligence plays. What do you think?

FISHER: So, first, let me make a point before I answer your question, which is that, throughout this downdraft, but including a day like yesterday, when the market was up, it remains true that which was true before, which is that, when the market's down, tech is down more than the market. When the market's up, tech is up more than the market.

That style shift hasn't really changed all year long. The fact is, there was that which you spoke of. There's always the fear of the Fed doing something stupid, which is -- and I have said many times on your show, they almost always do something stupid.

And then there was the fear of the yen carry trade. There's all the newness about Harris as the vice presidential -- as the presidential nominee, on and on and on. And there's all these, what about Iran adventurism? You can go on and on with fears.

CAVUTO: Right.

FISHER: The fact of the matter is, the corrections always have abundant fears that end up being shown afterwards to be false factors, and fear of a false factor is always bullish, because it's in the market price now.

The fact is, when you have been as strong as we have been for as long as we have been in the stock market, it doesn't take much to get people going, woo!

(LAUGHTER)

FISHER: And that's kind of all it takes to make the market.

CAVUTO: So, by your math, this could be overdone. And a correction of 10 percent off the highs is the classic definition, of course, is not necessarily a bear market, 20 percent or more. You don't see that yet, I guess, right?

FISHER: So let me go back to my point from before.

Yes, a correction is a drop technically defined as greater than 10 percent off broad market index, not a subset. So maybe that would be the S&P 500 or the All-World index, whatever, not some little slice in between --

CAVUTO: Right.

FISHER: -- and then not a drop bigger than 20 percent. We have had 35 of them in the accurate history of the S&P 500 since 1925.

And of those 35, the average drop was 13 percent. You almost never get the average, because the average is made up of wide variants. But it would not be surprising to me to see the market go lower before it goes higher because of the woo fears.

But the fact of the matter is, this is not the way -- the market is the great humiliator. It's always been the great humiliator. It wants to humiliate as many people as possible for as many dollars as possible for as long as possible. It's near-spiritual in that regard. And it wants to get you, it wants to get your family, it wants to get me, it wants to get every viewer and their mother.

And the fact of the matter is, it does that by slowly sucking in off the peak of a bull market in what looks like buying opportunities. And there's a thing I created decades ago, I mean, decades and decades and decades ago, when I was young, called the two-third/one-third rule, which says that the first two-thirds of a real bear market only constitutes about one-third of the drop.

But the last one-third constitutes two-thirds of the percentage drop. That -- give or take a few. That's the way bear markets operate. Corrections are sharp off the top, short, sharp, scary stories. They go away almost as fast as they come. And then you have resumption of the bull market.

They revert sentiment back to a lower-level by scaring the bejabbers out of people.

(CROSSTALK)

CAVUTO: So you're saying that we're going to resume this -- I'm jumping on you here, but -- for a limit of time. You're saying the bull market is still on? That has not -- that view of yours has not changed?

FISHER: And the aftermath of corrections are big up moves over the next six, 12, and typically 24 months, not perfectly so, of course, but those numbers are actually pretty darn strong.

CAVUTO: So, Ken, when you have nervous investors, and I guess -- and you always remind me this -- it depends on your time horizon. A guy my age, long term is lunch tomorrow. So that's different than someone much younger.

But how do you advise them, especially someone that I just need to sleep, I'm tired of this, I want to -- rates are still good enough that I could put my money in a C.D. or what have you bet and protect it? Because now I'm scrambling. What do you say?

FISHER: I'm going to say you got more ahead of you than you think you have. You have got a longer time horizon than you think you have.

And if you have a need for returns that would be consistent with equity, selling out in a correction is one of the dumbest things you can ever do, because the aftermath of corrections are big up moves, as I said before.

CAVUTO: All right, the campaign and the election, election years, you have reminded me, markets always do well.

Are we factoring in the election too soon? It's usually a September-October type of thing. But what do you think?

FISHER: So, this year, unlike most, it was just generally presumed at the beginning of the year that it would be Biden versus Trump.

And the fact of the matter is that took a fair amount of uncertainty off the table early. We had unusually low uncertainty, because, normally, we got all the contentious primaries and blah, blah, blah. We knew these two men so well, compared to any two that have run before each other, and I have said that on your show before, that there was less to get frittered about.

But now that Harris is anew and polls have tightened and, and, and there's more to worry about, so uncertainty is up. That's consistent with the time period of the market falling also. We will get to a winner. We always get a winner in November. We like the winner in November better than we thought we would when we started.

And uncertainty will fall and we will have that consistent with the market resuming when it resumes. Exactly when, I don't know. Could be next week. Could be tomorrow. Could be three weeks from now or the week after that.

But the reality is, corrections return to bull markets, and this bull market will continue. And, oh, by the way let me just say --

(CROSSTALK)

CAVUTO: Go ahead.

FISHER: Let me just say, if I may, that the one thing that no one has said about Governor Walz is that he reminds me more of Elmer Fudd than anyone that's ever run for vice president.

CAVUTO: That is a profoundly incredible insight there, so thank you for that. I think the Elmer Fudd fans out there will --

(CROSSTALK)

FISHER: You wascally wabbit, you.

CAVUTO: Yes, really.

FISHER: You wascally wabbit.

CAVUTO: You're a billionaire. You are a billionaire.

All right, Ken Fisher, thank you very much, and your insights on this political race.

END