Another New Era (In The Stock Market)

Forbes ^ | 10 December 2007 | Ken Fisher

[shrinkermd]

...I want to be the first to say we definitely are in a New Era of above-average returns. I'll keep buying stocks until we hear multiple pundits say we are entering a new period of high returns. That will be a time to sell.

When will this happen, that the consensus will turn almost uniformly bullish? I don't know, but I doubt it will be before 2009 starts. Hence, I'm expecting another above-average year ahead, an easy one.

Here are a few factors I don't fear as we enter 2008, either because they won't happen or don't matter: further collapses in the mortgage market; a credit crunch; Hillary as president (or whomever we elect--more on that next month); $125 oil; inflation; rising long-term rates; folly from the Federal Reserve (though I expect folly there); Iranian idiocy (a pleonasm); or anything you read in BusinessWeek. What do I worry about? I told you last month. My biggest fear is of a rising yen and for the reason I detailed. To wit: The U.S. and European markets are being propped up by speculators who borrow in yen.

But otherwise, buy stocks and be happy. It's still easy--five years into this bull market--to find above-average companies selling at below-average valuations. And this when valuations are in general low compared with the cost of long-term capital. Ones like these

[shrinkermd]

Before you certify Ken Fisher as a lunatic remember he has been a columnist at Forbes for over 20 years and in his part time has managed money sufficiently well to be #297 on the 400 richest. (Not inherited. All earned)

In other articles he has pointed out that the earning yield on the S&P 500 is above the 10 Yr Bond rate.

If you have been watching Forex lately, whenever the Yen hits or goes lower than 160 yen to the Euro or 110 or lower for the dollar, the market swoons. The big danger in borrowing Yen is if it strengthens your borrowing costs outweigh any opportunity to profit from the yield spread.

I have almost finished reading his most recent book--The Only Three Questions That Count. A really interesting read. Fisher is an unequivocal dustbowl empiricist and he is a far cry from the usual pundit pontifications.

[Jaysun]

I’m with Fisher on this. I trade on Forex at night. I think the money cometh in 2008 in stocks.

[Brilliant]

The foreign money is starting to boost share prices... Soon to be thru the roof!

[Always Right]

I have been bullish for several weeks now.

[jimbo123]

Don't buy this one:

[mozarky2]

Thanks for the chart-I just printed it off. We’re out of toilet paper and I don’t feel like a trip to Wal Mart.