Current State of Investor Sentiment and Expectations for Small Cap, From Fisher Investments

Fisher Investments’ Investment Policy Committee—the firm’s 5-member group responsible for all client portfolio decisions—believes relatively optimistic investor sentiment is one sign suggesting we may be in a late-stage bull market.

Ken Fisher, Investment Policy Committee member and founder of Fisher Investments, explains how the firm sees 2021 as year 12 of a bull market that began in 2009, and that the market cycle is treating 2020’s record-fast bear market as more of a market correction than a true bear market. One way this nuance has shown itself is that rather than fully resetting investor sentiment, investors grew more optimistic as 2020 went on.

Fisher Investments often looks to Sir John Templeton’s quote, “Bull markets are born on pessimism, rise on skepticism, mature on optimism and die on euphoria” as a general framework to gauge investor sentiment. Currently, Fisher Investments believes markets are generally optimistic and potentially verging on euphoric—which could be a benefit in the short-to-intermediate term for stocks.

While euphoria often precedes a bear market, euphoria alone isn’t necessarily a sell signal as it can drive really strong market returns that you don’t want to miss. Euphoria can run for a while before the bubble bursts. Fisher Investments believes now is a time to monitor investor sentiment and stay invested to reap further bull market returns.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

[AJ-iunw]

I was wondering if Fisher was looking for an intern to engage in market research related tasks, in particular finding under-valued companies that are worthy of traditional investor sentiments in this time of wild aimless speculation. Thought I'd give it a shot in the comments section, call me crazy, and then give me an interview!

[benitoproto]

Great framework to have in mind! Thank you!