Smackdown: Fisher vs El-Erian

Ken Fisher channels my monkey comments to diss PIMCO’s Mohamed El-Erian and their “New Normal” thesis.

I disagree with the New Normal thesis, but for very different reasons than Fisher does. (Note: I am a fan of his book, The Wall Street Waltz). I’ll post more on this later this week, but the shorter version is: The past few decades have been aberrational, and we are returning to the old normal.

As to the markets, I still believe the same thing I first observed in 2002: This is a secular Bear market, one likely to last 10-20 years, with strong rallies and selloffs occurring on a regular cyclical basis (think 1966-82).

I assume the next Bull market will start some time in the coming decade — 2015? 2017? Based on that, they both can be partially correct — the next few years can show mediocre returns, followed by a nice surge into 2020 and beyond.

“The next decade will be as good for investors as the 1990s, said Ken Fisher, the billionaire chief executive officer of Fisher Investments Inc., dismissing notions that developed economies face below-average growth.

Fisher said the concept of a “new normal” is “idiotic,” pitting him against money managers including Mohamed El-Erian, the CEO of Pacific Investment Management Co., which coined the term to describe a world of high unemployment, more regulation, and the shrinking importance of the U.S. in the global economy.

“We are chimpanzees with no memory,” Fisher said at the Forbes Global CEO Conference in Sydney. “The next 10 years are going to be just as good as the 1990s. The problems in this current environment we think are so different, and so new and so unique. It’s the same stupid old normal we’ve always had. We’ve got a great future.”

Where I disagree with Fisher is on the Fundamentals — in the 1990s, we had a massive build out in numerous tech industries: PCs, Networks, Software, Mobile, Storage, Semiconductors, etc. These are now much more mature industries, with the hockey stick portion of growth behind us.

I am less inclined to believe that (solar, batteries, biofuel) nano-tech, and genetics can ramp up to that level of revenue and profit.


Ken Fisher Dubs Pimco’s New Normal Concept ‘Idiotic’
Angus Whitley and Jacob Greber
Bloomberg, Sept. 28 2010

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