TRANSCRIPT

                         August 14, 2024

                          NEWS PROGRAM

                                

      KEN FISHER, FOUNDER AND CHAIRMAN, FISHER INVESTMENTS

                                

                                

                                

  FBN, CAVUTO: COAST TO COAST INTERVIEW WITH KEN FISHER, FOUNDER
                  AND CHAIRMAN, FISHER INVESTMENTS

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     FBN, CAVUTO: COAST TO COAST INTERVIEW WITH KEN FISHER, FOUNDER
     AND CHAIRMAN, FISHER INVESTMENTS

     AUGUST 14, 2024

     SPEAKERS:
     KEN FISHER, FOUNDER AND CHAIRMAN, FISHER INVESTMENTS

     NEIL CAVUTO, FBN ANCHOR

CAVUTO: All right, it's hard to believe, and even with the slight downdraft of the Nasdaq, all three market averages are higher than where they were on the close of trading after August 2.

Of course, that was before the Monday, August 5, freefall, when the Dow lost better than 1,000 points in one day. That was then a very different market temperament then. Of course, we remember how freaked out the markets were and thinking it was the end of the world, and the Fed was going to have to have an early meeting and cut rates maybe by half-a-point.

One guy who was pretty calm through that is my next guest. Ken Fisher joins us now, the Fisher Investments founder and chairman.

I don't know how long this comeback lasts, Ken, from where we were on August 2, but it's almost as if August 5 never happened. What do you make of it?

FISHER: Well, first, thanks for having me back on, Neil.

CAVUTO: Thank you.

FISHER: Second, I enjoyed your snack conversation with Dave Asman.

And I'd say that the main snack food during all of this period that the market was dealing on was Snickers.

(LAUGHTER)

FISHER: And the commentary from a -- I mean, my stock answer is that most all of the negative views were just simply, if you thought about in a more healthy way, they were just nuts.

But the fact is, I mean, I have been for a year and three-quarters now consistently telling you this is a bull market. The bull market won't last forever, but none of the features that people talked about are derailing the bull market that exists.

And the correction is a good thing, because it resets sentiment lower or and sets the base of the next leg. And there were so many different things that people were gyrating on, as I said on your show 10 days ago, I think it was, all at the same time about why this is terrible, that's terrible, and the third terrible, ooh, that it's worked very effectively.

CAVUTO: So, what are some of the signals you look for where you say, all right, this might be a bull market ending?

What typically happens? What kind of noise do you see?

FISHER: So, first, bull markets end. They end with either a long rollover, where the market goes sideways and then down slowly for a good period of time, before it later plunges, or it gets some big, bad shot that nobody's ever talked about that comes out of nowhere and surprises everyone in a singular focus, a little bit like what happened with COVID.

And that happens very rarely. It does happen, but it's very rare. The fact of the matter is, the other thing you're looking for is excessive euphoria, and people always pre-presume that optimism is euphoria.

As John Templeton famously said, bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria, but they don't die on optimism, unless you get that extraordinary wallop I was talking about a moment ago.

The fact of the matter that people focus on wrongly in a bull market is, it keeps getting higher. That makes fear of heights greater, and they keep looking for all the wrong things. So, as I have said endless times for you, focusing on the Fed is almost always a mistake.

Getting excited about things, as they did this time, were the employment numbers not quite as big as they'd like, and was the unemployment rate up a little more, leading to the SAM ratio being a potential problem. Ooh.

The fact of the matter is, all of those things tend to focus on government-related data that aren't that precise to begin with and reading into them small changes in something that's not accurate to begin with that shouldn't be paid much attention to on a monthly basis anyway.

CAVUTO: Do you look at real estate much, Ken? I mean, on mortgage activity refinancings, breaking it down, picked up at a 35-36 percent clip in the latest week, largely, I would assume, because of the lower rates.

It's over 100 percent boost in that type of activity over the last two weeks. What do you make of housing?

FISHER: Well, A, just driving down the road, you can't help but see real estate, but the flip side of the coin is, you can see it two ways. You can see it the good way and the bad way.

If you just think about the inflation numbers that came out this morning, the one big upward driver in them -- again, numbers that aren't that accurate to begin with and people overextrapolate into them -- was the increase in real estate prices.

But if you're a homeowner, you think the increase in real estate price is a good thing. If you're somebody who wants to buy a home, you complain about the lack of affordability. And then, the mortgage rate comes down, that makes it more affordable, but then you buy the house and that tends to want to help push the price up.

So is it a good thing or a bad thing? What I would say is, it's a pretty normal thing, and nothing about any of this is very extraordinary. So people shouldn't get excited about it. People get way too excited about trying to take little things, read something into them big, which is a sign that we're in optimism, not in euphoria.

And it's when you're in euphoria where you get huge numbers of IPOs, where you get people forecasting things way out into the future, where you see all kind of people talking pie in the sky, that you need to be more concerned.

At this point in time, the corrections that we had, which was modest, at best, went straight off the top, straight down, classic correction, lots of things people talk about. This is a good thing, not a bad thing.

CAVUTO: I don't know if this is blow-off activity, but Mars and this $36 billion deal for Kellanova, you can make a substantive argument, obviously, that this addresses this competition and obviously wanting to find a leaner, meaner way to have everything under one company. I get that.

But we don't see a lot of these type of big deals. Is that a good or a bad thing? Something like this is noteworthy, given its sheer size, but what do you make of that, the absence of huge deals?

FISHER: Generally, the fact of the matter is that that's perfectly parallel with what's gone on for the last couple of years anyway, where private equity activity has been subdued.

And part of that's been as we have moved to the higher interest rate environment with a time lag causing them to all have a tougher time making money off of a deal, because some of this was always just -- some of this was always low interest rate money being deployed previously.

But my point is, the world of large takeovers is also a sentiment statement. When we get too optimistic, you see more takeovers, because corporate management believes that they see a great future ahead and can justify the takeovers.

The relative paucity of large takeovers is another sign that we're not in that semi-euphoric stage that's something that people should worry about. We don't have a lot of IPOs. We certainly don't have a lot of crazy IPOs. We don't have a lot of big crazy takeovers.

You -- whenever you have got a takeover, company A buys company B, the odds are, not perfectly so, but usually so, that the seller knows more about what they're selling than the buyer knows about what they're buying, even when they're in the same industry, because the seller's on the inside of it. The buyer's not.

And even though they do all this due diligence or what have you, which they do, the fact of the matter is, in that process, as they do it, they still get overwhelmed by their own emotion and the emotion of all of us around all of us.

When I say that, let me be clear, all of us around, all of us feeding on each other emotionally. And corporate managements doing those takeovers are just as prone to be overwhelmed by emotion as anybody else, from somebody's mother to the taxi driver to anybody. The fact is, the relative paucity is a good thing, not a bad thing.

CAVUTO: Well, you zig while the others zag, and you make people think. So, Ken, I appreciate having you on.

Ken Fisher, Fisher Investments founder and chairman, as he was...

FISHER: Always good to be with you, Neil.

CAVUTO: Same here, my friend.

The Dow up a little bit more than it was when he started talking, S&P 500, Nasdaq about even money for the time being.

END