The Stock Market Surprise We See Ahead

Transcript

Ken Fisher:

By now, my stock market outlook for the year is getting a little old, but and I've written about it in the English language in the New York Post, here in America and The Australian in Australia and Daily Telegraph in Britain and The Independent in Ireland and the Globe and Mail in Canada.

So, you know, and I write better than I talk anyway, so you'd be better off reading it than me talking about it, but this should be a shockingly surprising year, in my opinion, in the stock market, because it will be an extension of a third big year in a row, but not one that's very recognizable to most Americans, because it will be and is led by Europe and value stocks.

Now, I came to that view because first, growth has been outperforming value for a long time, and when you think about it—which most people don't— growth and growth-like stocks, mostly tech and the growthy parts of Telecommunications Services, and a little more outside of those two categories in luxury products, constitute well over 40% of the money value of the US stock market. They constitute very little of the non-U.S. stock market. Tech and Techy growth is just interlinked with the Land of the Free and the Home of the Brave. And in that, when Tech does better than the market, the US will do better than overseas. When Tech does worse than the market, The US will do worse than overseas. It's axiomatic. As Donald Trump got elected president, regardless of what you think of him, for good or for bad, the fact of the matter is, he scared the bejabbers out of a lot of overseas investors, particularly European investors. Not just the tariffs, but the tariffs, for the most part, Europeans are "tariff-ied" of Trump and what will happen, but also just other things that Trump does, like his talk about taking over Greenland.

Some of his comments about NATO. Some of his comments about Ukraine. I don't want to get into any of all of that, but what all of that has done is made Europeans way too pessimistic. It takes very, very little to make the European market shine this year because they're already too depressed. Said differently, if things are bad in Europe, but not as bad as people currently expect— because the difference that makes the market move is current expectations versus subsequent future reality, always— if things just aren't as bad as people expect them to be, stock market goes up. That's what's happening. And that should be happening most all year long.

This should be the first year in quite some years where value beats growth. And as that happens, the US lags the non-US world, and particularly Europe, which is so heavily value laden. So that's been my core forecast. That will remain my core forecast until I see some big change or something different that should make me change my mind. But I babble on these videos pretty much every month, so you can hear that if it ever happens this year. Otherwise, that's my view. I think it'll be another big year in the market with global 20% kind of returns. Oh, a couple more points. Professional forecasters, they don't expect it to be a big year.

What professional forecasters agree on doesn't ever happen. It's already what's been pre-priced into the market. Therefore, something else happens. Could be a negative year, that's possible. It could be a much more positive year than professionals think. But our relatively average sounding year isn't going to happen because that's what professionals are expecting—a moderate up market, maybe 9 to 12%. The other point is that when we look at the history of the last century, inaugural years when Republicans are elected have been up 60% of the time. And when they're up, they've been up an average of 25%, a little over 25%. That would be huge, bigger than I'm expecting for the US market this year. But US and non-US correlate, and I think that fits into a year that's big in the US, but bigger overseas. Not huge in the US. Maybe not 25%, maybe 15, 16, 17, 18.

I don't really know for the S&P 500, but stronger overseas, which is the part that you don't really get to feel as an American. This year, the S&P doesn't feel strong. It's up, as I speak, but it doesn't feel strong, and particularly not as NASDAQ and Tech stocks are lagging the S&P. But look overseas and see how much stronger it is there because that's where the market is. Thank you so much I hope you found this useful and educational.

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