Ken Fisher, billionaire fund manager at Fisher Investments, son of Buffett mentor and legend, Phil Fisher, says the V-shaped market recovery is real, and is led by Emerging Markets, which have now registered a 100% gain from March lows. The MSCI World Index has turned in a 66% return since March.
Fisher contends that we are now 6 months into a bull market.
"When you have global movements like this, they never reverse. That is, single countries have counter trend rallies in bigger markets that sometimes blow up, like Japan, or America in the early 1930's," Fisher said. "But when you look at a global basis, you don't get moves this big that are counter-trend sucker rallies. This is too big."
Its a classic and perfect V and again, [involves] a lot of countries. As single countries don't show the V, but when you look again at 1973-4, when you look at 1929-32, and 1982, and you think globally instead of single countries you get this V pattern.
Fisher quoted Templeton who once said the 4-most dangerous words in the English language are "It's different this time," adding that people say that in every cycle. He added that "Its always different, and its always the same."
The first half of a bear market is all about fundamentals; the back half of a bear market is always about us freaking out about things. Its purely emotional, purely sentiment. If its purely in our heads, we think we're talking about fundamentals, but we're not really thinking, we're only emoting, and that creates this depressed spring effect that reverses and goes back just as fast as it depressed. The rate of descent, just like you said, must have meant bigger problems must mean slower longer to have a recovery. The fact of the matter is, the steepness the descent determines almost perfectly the the steepness of the ascent.
When you go back to other times in the past when there have been weak economic recoveries, that hasn't stopped the stock market V. If you take 1932, the period between 1932-34 was not a particularly robust economy, but for those years the stock market was up 135%. The fact is the V works anyway - that's the part that's hard for people to get.
View the Fisher interview here or click on the image below.
Source: Bloomberg.com, September 16, 2009
