What I found so amazing during 2006/07 was the brimming (tho misplaced) self-confidence of the Housing Bulls . . .
Ouch:
"Don’t buy it. For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007’s housing disaster turns out to be. Well, there won’t be any housing disaster. We won’t have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.
You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now
Did you know that housing sales are up in the last few months, not down, and that inventories are lower than six months ago? We’re accelerating, not landing. This is true not just in housing but also pretty much across the board."
– Kenneth L. Fisher
Forbes, 02.26.07
Recommendations: Buy Pulte, Toll, Beazer
Source:
Housing Boom!
Kenneth L. Fisher
Forbes, 02.26.07, 12:00 AM ET
http://www.forbes.com/free_forbes/2007/0226/110.html
We need to find out what kind of drugs Fisher is using. The stock market is a group of folks with money looking for a place to put it to work. On Friday and today the markets have rallied 300 points just on the news that AMBAC & MBIA would either be rescued or keep their AAA ratings. Please, find other investments before its too late.
Who is this Ken Fisher. I know only that he is associated with Forbes but he clogs my mailbox with all kinds of hype.
From what I understand, he must be Kudlows love child.
Hey, even a stopped clock can be wrong 86,398 times a day….
if Ken were any smarter he’d be cinefoz. LOL
C’mon folks, the world is not at an end. You bears need to quit it.
That’s just cruel. But damn funny. Fisher is a marketing machine attached to a small investment firm. Unfortunately, that looks like it’s about to become a liability for them.
America has already crash landed.
Gets poorer by the day.
I am bullish on Commodities and Asia
Really, when you’re speculating on your own hook, guys who cop an attitude like Fischer, drop a load of dung and then walk away and claim it doesnt stink don’t merit being cut a whole lot of slack by the adults in the room.
Of course inventories are lower than 6 mos. ago…that was at the end of the summer, when sellers still didn’t grasp that their overpriced house wasn’t going to sell at current list price…give it 60 days and look at the inventory trend then…it won’t be pretty, and will likely crush last springs YoY inventory #’s. But in MD now we’ve got new metrics for calculating DOM, just to screw over buyers AND lenders into thinking a house off the market only 90 days (instead of the old 180) is a fresh, new listing…
Good article.
PHM: 2/26 ~ 40
Today ~ 15
TOL: 2/26 ~ 32
Today ~ 22
BZR: 2/26 ~ 42
Today ~ …7.7
I like the numbers. He got the housing market right.
Does Wall Street know this? Somebody should clue them in, before they start looking incompetent.
Barry,
Thanks for exposing Ken Fisher as a goldilocks perma-bull promoter. I believe his track record in the tech bust was just as bullish. We need for outing of these charlatan fools.
Fisher is a bright guy who made a bad call. His investment business is very large and quite successful. In general, he is worth listening to — he gets much more right than wrong.
And, when I was formulating my current investing strategy, he was willing to waste 3 e-mails on a relative nobody like me back in 2000. Helped me a lot; my ideas are my own, but he gave me help in figuring our what avenues to ignore.
And, when I read what he wrote on real estate back in early 2007, I just shook my head. Everyone makes mistakes, especially me.
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
Early Summer 2007 he said there was no credit crunch on a Bloomberg TV special. This guys is consitent at least, consistently WRONG!
How come no one sees inflation as a huge problem. Look at Oats futures, they went up 5% today. They don’t have anything to do with Ethanol.
Well, whichever of the homebuilders stays in business is probably a really good buy right now. My money is on… other things. That is too risky a play. Also, thanks Ken Fisher! Your big packets were my best kindling all winter long. Hopefully the gases generated by burning his collateral aren’t as toxic as the advice itself.
John,
That is like saying “what does wheat have to do with corn?” Oat futures sure do have something to do with ethanol. They are something a farmer can be doing other than producing ethanol. Even if they don’t compete head-to-head (I am not a grain farmer so I can’t say) they certainly compete indirectly for ground, farmers, and resources.
When I was a naive young man, Ken Fisher’s Forbes columns were gospel. Anything he writes about now I ignore and have been financially rewarded.
When I was a naive young man, Ken Fisher’s Forbes columns were gospel. Anything he writes about now I ignore and have been financially rewarded.
I actually checked Fisher’s book out from the library last spring. (I got smart like that after paying retail for too much garbage.) Got thru about 1/4 of it before returning it early. It was like a Tony Robbins feel good program of inane & directionless direction. And who would write the foreword to such a book? None other than the biggest most pathetic financial jackass of all, Jim Cramer.
I am in the business and he is an idiot – IT SUCKS and saw it coming 2006 ws peak. Thirty years in the business and we are waiting for more blood……
No investor is immune to making a bad call in the market. Fisher has a good long term track record, and has done some interesting research and writing on PE ratios. His dad, Phil Fisher, was a legendary investor who had a huge influence on Buffet & Munger.
This blog should be called
The Big Schadenfreude.
No worries, there’s a knight in shining armor so it’s all good.
The fact is, these companies are enormously leveraged and their debt is killing them. If the Fed cuts short term rates 1.25% and these stocks don’t go up, that’d be some seriously bad news. Taking that much off the debt service for some of these companies may mean survival (for a while). It does not mean the dark times are over.
“Also, thanks Ken Fisher! Your big packets were my best kindling all winter long.”
Philip, If you ever start doing stand up comedy let the blog know as I’m sure you’ll pack em in. Excellent!!!
I almost choked laughing on the Chard I’m (sippin) here in the Californee sun. It ain’t the cheese that makes our Real Estate a little pricey.
A bad call is more like saying
Google will go up and then it tanks.
You call missing the entire essence of the housing bubble…a bad call?
Hello McFly..is anyone home?
“General Eisenhower made a bad call. He didn’t realize the Nazis had weapons when he told our troops to attack.”
I wonder if Kenneth is related to the illustrious Irving Fisher who told the world in late 1929: “Stock prices have reached what looks like a permanently high plateau.”
Ken knows a lot about PE ratios. He wrote an article which I believe was titled: “High PEs equals Low Risk.” It was published..that’s right…during the high PE market of 1999. His timing on the release of that article was about as good as his timing on the release of his Housing Boom article. He is simply brilliant. Just ask him.
Watch out for housing. Starts peaked at 2.292M annualized per year Jan 2006 and two years later are at 1.012. Just think, in two more years at this rate housing starts will be a negative 0.270, we’ll be tearing down houses. And then two years after that we’ll be tearing down houses at an annual rate of a negative 1.5 per year. And you all think that the current time is scary, wait.
Hey, back off about his recommendations. I shorted Beazer at 26. Or, do you mean I was supposed to buy? Shit. I’ll give the money back.
Perhaps what popped the bubble was the Supreme Court upholding the city of New London’s call option on all private property within the city limits. Date 6/24/05. Existing home sales peaked 3 months later. A total repudiation of property rights does wonders for asset values. Guess Fisher didn’t understand.
1)Lenders are tightening guidelines. Bigger down and better borrowers need apply only.
2)Consumers are tapped and MEW is dead.
3)Auto and Credit card defults rising
4)The SIV, ABS, CLO, ETC markets are non-functional…….no liquidity. Insolvency??
5)The FED is funding the broke banks in overload mode. TAF is magical…
6)Home values are still going….down
Thanks Ken Fisher for your upbeat analysis. Certainly makes sense in light of the above,and additional non disclosed banking items. Did you advise B of A too??
Recently ( 2 years ago), I thought these investment guru’s where smarter than me.
Yet, I keep laughing all the way to the bank… or is that PM or commodities….
Keep up the good work for the sheepeople,Ken.
You ARE a marketing machine.
Fisher’s a complete idiot. A blind mind could see he’s in the role of a shill.
Ken Fisher has done an excellent job in his primary business which is collecting assets under management (AUM); this not coincidentally is also the primary business of every other money manager with whom he is in competition.
Not much point in condemning a man for the way he makes a living when you don’t focus on what his way of making a living actually is; kind of like condemning a televangelist because God doesn’t answer your prayers after you make a donation.
Fisher’s business is collecting AUM and taking his percentage, all the rest is incidental.
Regardless of what the Fisher thinks, housing is deteriorating at an accelerating pace. Just wait until inventory blows through the ceiling in a few months come spring. Prices will plummet big time.
Mike Shedlock had a few well written thoughts on MBIA today. The worsening housing market will only add to his thoughts. They’re quite good and in light of today’s news from the ratings agencies flashes in 1 billion candlelight power the whole world to see what a total farce the rating agencies are, the insurance regulators are, the banking system is, and those willfully ignorant bastards permitting this farce to continue. So outraged I could piss flames.
From Shedlock’s piece
Do The Math
In MBIA Admits $30.6 Billion CDO Exposure we saw that in addition to the $30.6 billion in worthless CDOs that it guarantees, MBIA has an additional $8.1 billion in worthless CDO squared (CDOs of CDOs) securities that it guarantees. That’s makes MBIA’s total CDO exposure $38.7 billion. And it hid that for months. It has total cash of $5.73 billion. Even if one pretends those CDOs will be worth 50% on the dollar, how does one possibly get AAA out of that mess?
Here’s The Deal
-MBIA hid $38.6 billion in CDO exposure for months
-MBIA Posted a loss of $1.93 billion last year
-MBIA CEO Brown will not sign off on results
-MBIA CEO Brown has questions about how big the writeoffs will be
-The S&P estimated that MBIA may have losses of $5.5 billion before tax, eliminating its entire capital cushion.
-MBIA wants to hide losses for up to 5 years, hoping nothing else blows up, and future earnings cover the losses.
Anyone who thinks those CDOs are marked to market has holes in their head.”
Ya folks, that triple A for you folks. And the market rallies on this. What a complete joke.
Forgot to add: oh ya, now after all this MBIA BS, wait for it…..
THEY DOWNGRADE PFIZER!!!!!! Jesus Murphy….. you could make this up…
http://www.reuters.com/article/bondsNews/idUSN1264261420071212
Hey Fisher, just for you.
For release:
Monday, Feb. 25, 2008
C.A.R. reports sales decrease 29.8 percent, median home price falls 21.9 percent
LOS ANGELES (Feb. 25) – Home sales decreased 29.8 percent in January in California compared with the same period a year ago, while the median price of an existing home fell 21.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today
———————————————————————–
March 2008 Atlantic Monthly
The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.
by Christopher B. Leinberger
“..The decline of places like Windy Ridge and Franklin Reserve is usually attributed to the subprime-mortgage crisis, with its wave of foreclosures. And the crisis has indeed catalyzed or intensified social problems in many communities. But the story of vacant suburban homes and declining suburban neighborhoods did not begin with the crisis, and will not end with it. A structural change is under way in the housing market—a major shift in the way many Americans want to live and work. It has shaped the current downturn, steering some of the worst problems away from the cities and toward the suburban fringes. And its effects will be felt more strongly, and more broadly, as the years pass. Its ultimate impact on the suburbs, and the cities, will be profound..”
————————————————————————-
Last but not least… Fisher getting a sense yet of what’s going on? May a long forgotten relative?
http://www.chicagotribune.com/business/chi-sun_fraud_0224feb24,0,3601248,full.story
I wish I was Ken Fischer. He has a billion buckaroos and I don’t!?!
I don’t.
After reading that dribble I have this image of Ken Fisher and Steve Forbes passing the bong while discussing the market.
That is so wrong!
>> Perhaps what popped the bubble was the Supreme Court upholding the city of New London’s call option on all private property within the city limits. Date 6/24/05. Existing home sales peaked 3 months later. A total repudiation of property rights does wonders for asset values. Guess Fisher didn’t understand.
>> Posted by: Bob | Feb 25, 2008 9:25:15 PM
Looking for the mosquito-wing-flap that caused the hurricane on the next continent?
Bubbles sow the seeds of their own demise. Fraud and overreaching were far larger problems than the problem you just cited.
FWIW, I can see both sides of the legal debate in that case but look favorably at the consequences: the public was outraged enough by the decision to pressure legislators to actually do something about it.
Actually Fisher has an absolutely great track record. He has beaten SPX for 20 or so years in a row, invented P/S ratio and many other things.
Now while he was terribly wrong on housing does not mean he is not an excellent money manager.
Now if you look at his reall positions he was overweight energy and row materials and underweight financials in 2007 acording to gurufocus, so in 2007 he was supposed to do very well relative to his benchmark.
Point is – before making fun of anyone’s mistakes you should look at long term record.
Like this:
http://www.cxoadvisory.com/gurus/
If we look at real test of forecasting ability, it’s obviuos that Fisher is way ahead of virtually everyone, including John Hussman who was celebrated at this blog not long ago. Actually hussman was only 51% right, slightly better that coin flipping…
2 issues:
1) We aren’t discussing forecasting — this is asset management. BUY HOMEBUILDERS in Feb 2007 is a stock rec. As I say regularly, we’ve all make bad buys — but this was disatrous. (If there was a stop loss or a sell call issued, please send).
2) I haven’t found any data confirming that he beat S&P 220 years in a row. When Bill Miller’s streak ended at 15 consecutive years, there was a lot of hoopla made — and a discussion of the next best managers, which at the time had 8 year streaks.
Can you find a link showing that? I’d be very interested in seeing it.
BTW, I do think Fisher has written some very smart and very observant books — its just that this miss was so wide and deep, it was worth revisiting.
BR is being too nice, I will call it straight —
This was a horrific investment, and even worse, it was caused by Mr. Fisher’s perma-bullish tendencies.
Let’s face it — you put your clients into 90% losers, and you have a major problems with your approach.
And as our host often states, its the process, not the specific outcome that matters. In this case, the process sucked.
The really odd thing now is that, if you have a long view … 12 months more or less, housing as a sector is a good buy. That being said, there are a lot of other places that will pay off much sooner then 12 months from now. And housing will probably, rise, fall and then rise again later over that time.
I’ll probably consider housing as a sector this summer after the typical mid year dip arrives. It will probably roar after the good news starts trickling in.
Fisher was just as bullish in 2000 on the tech bubble as I recall. He’s basically one of the stable of Babbitt style boosters who write for Forbes. There ought to be a govt health warning on this mag just like the one on the national association of realtors.
Barry, i was obviously wrong about him beating the index 20 years in a row, but he has beaten the index up to 2006 by a big margin, lagging only in 1997 and 2002.
Was not able to find his performance for 2006 and 2007.
Now the extend of the damage we can only speculate about -as i think you well know, since you like his books, he is a very strong advocate fo benchmarking, so he obviusly was not 100% invested :)
It is not your post but some comments on this blog which seem very vewry strange – for example portraing him as a perma tech bull, while he shorted/hedged the market in the right time.
Why i am begging to reconsider on Fisher here is because, judging from his books again, i think he has great understanding of capital markets, is a proponent of scientific method and has correct views on how securities prices are set in the market place.
Obviously with this kind of approach you can not be perma bear or perma bull or whatever. And mistakes – yes we all do them a lot.
I love relevant remarks – to wit Ken Fishers dad was a great investor. My dad was a great fireman. That should make you feel better when I torch your house?
Ken Fisher is making his father (Phil) turn in his grave! But then again, even Phil made huge mistakes when he got old… it’s only human nature.