Ken Fisher is one of the most successful investment advisors in the United States. Forbes Magazine regularly lists him as one of the 400 richest Americans, and has published a monthly column by him since 1984. His father, Philip Fisher, wrote one of the very first bestselling investment guides, cited by no less an authority than Warren Buffett as a seminal influence on his own stock picking strategy.
He's hard to miss. If you happen to Web surf your way to a Forbes article published online, a video ad for his services adorns nearly every page. Indeed, his Web ads are infamous throughout the online stock picking world.
But he's also not infallible. Barry Ritholtz snags a nice catch at The Big Picture today, reminding us of a column titled "Housing Boom!" by Fisher published in Forbes on February 26, 2007. (For the record, How the World Works featured a post two weeks earlier that February detailing the havoc the housing bust had begun to wreak on Florida and California.)
Ken Fisher:
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
Fisher than recommended buying three homebuilder stocks: Toll Brothers, Pulte, and Beazer.
Just for fun, I looked up the stock prices of those three companies on Feb. 26, 2007, and compared them to their closing prices today. Toll Brothers has sunk from $31.66 to $21.92 a share. Pulte went from $31.22 to $14.75. Beazer completely imploded, plummeting from $41.74 all the way down to $7.77. And there's no sign of imminent improvement. The National Association of Realtors reported on Monday that existing home sales declined in January for the sixth straight month. Home prices continued to fall.
To be fair, in reviewing his overall dismal performance in picking stocks in 2007, Fisher acknowledged that he made a "very wrong decision in February to jump into housing stocks." Everyone's allowed a little mistake, now and then: the guy wouldn't be the 271st richest American if he was regularly wrong, right?
But it's instructive to review his columns for the last year, which have taken place against a steadily worsening economic backdrop. In his most recent column, published Monday, he declares himself "bullish," because he sees a lot of current parallels with the Asian financial crisis of 1997, and guess what, 1998 was a good year for stocks. His January column is titled "We're Too Gloomy" and last April, he instructed us to "Don't Worry." Suffice to say, the man is a relentless bull.
After all:
We've had only three negative fourth years of a President's term in the S&P 500's history: in 1932 as the Great Depression bottomed, in 1940 as World War II began heating up in Europe and in 2000 as the tech sector disintegrated and we had the first constitutionally challenged presidential election in a century.
What's worse? That you can make billions of dollars by peddling such malarkey, or the prospect that if there is a recession in 2008 and stocks do perform poorly, we can console ourselves by knowing we are in good company with some of the greatest disasters of the last century -- the Great Depression, World War II, and the "election" of George W. Bush.
Shares