In an interview with CNBC-TV18, Kenneth Fisher, Founder, Executive Chairman, Co-Chief Investment Officer of Fisher Investments, said that he expects global stock market returns to be in double-digits in 2022. He also believes that while cryptos are a risk, they aren't likely to be one in the coming year.
As rising fear of the US Fed accelerating its rate hike cycle grips the market, the surge in the number of Omicron cases also paints a rather grim picture. To understand where the global market currently stands, CNBC-TV18’s Latha Venkatesh spoke to Kenneth Fisher, Founder, Executive Chairman, Co-Chief Investment Officer of Fisher Investments.
According to him, the market pre-prices information. The long-term bonds would have reacted had inflation been a real worry. Fisher's sage advice in this regard is to believe more in the market and less in the chatter. In fact, he expects global stock market returns to be in double-digits. According to him, the only reason for a slow start to 2022 would be because of investors clutching onto fears.
He said, “The reality is that markets pre-price all widely known information, that's what they do. So you don't have to worry about those things because they are pre-priced. I will tell you that the worries about Central Bank raising rates are driven by worries about inflation."
"The simple concept in its most basic form is that if these were real problems, I guarantee you, we would have already seen them in the long-term bond, and the long-term bond would have already been rising rapidly. And in fact, it's been exceptionally benign the whole time,” Fisher added.
“People that have these concerns do not understand history. They miss the core history of the fact that when the biggest central bank in the world, the US Central Bank, increased rates the first time-- 1-year, 10-year and 30-year -- bond rates have tended to be exceptionally stable, a little bit of volatility, which is normal but otherwise, exceptionally stable the year before and the year after. So people should get over these fears. These are just fears,” he said.
Fisher believes the next trigger for the US market will be the mid-term elections to be held next year. He added that the US market will eventually pre-price the political gridlock as well.
As far as emerging markets are concerned, Fisher believes 2022 might be better than 2021. He stated that the 2020 bear market run acted as an oversized correction as it was over fast and was v-shaped.
“The big issue that most people missed last year is the 2020 bear market, which it technically was, because it was so big. But it acted like an oversized correction because it was over so fast and was so perfectly V-shaped and in that, if you think of it as a huge correction inside a bull market that had been going on for a long time and continues today, you actually see better that we are late in a bull market," Fisher said.
"Growth stocks and tech typically lead late in a bull market and that typically goes on irregularly until you get to the final end of that bull market, which I think could still be a couple of years away,” he mentioned.
On cryptocurrencies, Fisher said that he is not too keen on them. However, he prefaced it by saying that though cryptocurrency is a potential risk, it is unlikely to be one in 2022. He said, “Normally these kinds of things burst after you have already started what is a normal kind of a bear market. The bear market begins first, bear markets usually begin gently, not violently and then they get more violent later and during that period, you usually see these kinds of things blow up and become real problems."
"I do think it's a potential risk, but I don't think it's a potential risk that is likely to be a problem in the year 2022, probably afterwards,” he said.
Watch the accompanying video for the full interview