With most forecasters expecting moderate gains or minimal losses for stocks in 2014, Kenneth Fisher says we’re likely to get returns that are more extreme — likely on the upside.
In his latest Forbes column, Fisher says it’s hard to find credible strategists predicting more than a 13% gain for the year, or worse than a 6% decline. Bears have seen their arguments fail time and time again and are no longer predicting disaster, he says, while bulls are worried the market rose too far, too fast last year and is due for a correction. But, says Fisher, “No one consistently predicts corrections or ever has, so that’s a risk always best ignored. At best a bear market might be partially avoided, but trying to do anything other than ride through a correction will likely get you whipsawed. You can’t time a correction. Period.”
With most predicting returns in that 13% to -6% range, Fisher says “that 19-percentage-point spread is what is now discounted into pricing. Hence the market is most likely to continue booming, up 20%-plus, or officially correct, down more than 10%. All or nothing, embarrassing basically everyone.” He says it’s more likely to surprise on the upside, and discusses several stocks he’s high on. Among them: IBM.
Validea’s Ken Fisher-inspired portfolio is up 13.3% annualized since its mid-2003 inception vs. less than 6% for the S&P 500. Check out its holdings here.
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