MARKETS DIG THEIR WAY OUT
On March 9, two years after the S&P 500 fell to 676.53, in what proved to be the nadir in the markets of this financial crisis, the critical question is where are the markets now, where are they going and what should advisors and their clients take away from the crisis?
AdvisorOne canvassed some of the best investment minds—money managers and observers alike—to plumb their wisdom on what the long-term effect of the crisis would be on advisors and investors, and where the markets are headed.
AdvisorOne spoke with Ken Fisher, Liz Ann Sonders, Sam Stovall, Ben Warwick, Jeff Kleintop and Malcolm Gissen.
AdvisorOne canvassed some of the best investment minds—money managers and observers alike—to plumb their wisdom on what the long-term effect of the crisis would be on advisors and investors, and where the markets are headed.
KEN FISHER
CEO, Fisher Investments Inc.
In an e-mail exchange with AdvisorOne on Monday, Fisher, the billionaire investor, answered the question of "where are we in the market cycle now?" by responding that "this is likely to be a relatively flattish year." However, Fisher said that 2011 may well provide "the pause that refreshes before the bull market resumes with gusto in 2012." So where will we be a year from now? "About where we are right now by most major measures," Fisher responded, "like the global stock market indexes and global long-term interest rates."
As for the lessons learned from the financial crisis, Fisher counseled advisors "Don't believe the consensus. Big bear markets are followed by unbelievable bull markets." His parting words of caution, "You can't believe what most folks are saying."
AdvisorOne canvassed some of the best investment minds—money managers and observers alike—to plumb their wisdom on what the long-term effect of the crisis would be on advisors and investors, and where the markets are headed.
LIZ ANN SONDERS
Chief Investment Strategist
Schwab
Sonders does not do forecasts and calls herself an "equal opportunity critic" when it comes to the political class, but as for what advisors can learn from the crisis and the aftermath, she said in a Tuesday interview that the most valuable lesson "is that the best gains come off the worst times in the market." She said it's "fairly typical for the market to be a leading indicator" that "anticipates" the return of the economy.
While she expresses bemusement that the "perpetual bears don't see how the market could be doing so well because we haven't yet seen robust economic growth," she in turn is "amazed that this simple relationship between the market and the economy" that has "always existed" is overlooked by so many.
Acknowledging that many Americans "have become soured on our own prospects," she quietly declares that "I'm not one of them."
AdvisorOne canvassed some of the best investment minds—money managers and observers alike—to plumb their wisdom on what the long-term effect of the crisis would be on advisors and investors, and where the markets are headed.
BEN WARWICK
CIO of Aspen Partners and Quantitative Equity Strategiesr
"What I think about is that the last two years—with an emphasis on March 2009—is the importance of the advisor in the process; one of our biggest roles is to keep people from hurting themselves; to keep them in the market and to keep them from selling at the worst time. The folks who hung in there are probably ahead of where they were when this all started—even if you're giving people 60-40, net of fees, they're better off."
Those are some of the lessons Warwick learned in the financial crisis and its aftermath. Warwick, a regular blogger for AdvisorOne in addition to writing the monthly Searching for Alpha index newsletter, says that advisors perform that role by communicating regularly with their clients, in good times and in bad but especially in volatile times. For him, the advisors who "are the most successful in this business are willing to do the most painful things: buying when everybody is selling, and vice versa."
So where are the markets now, and where will they be in a year's time? For Warwick, the "warning signs in the market are focused on Apple stock. I love Apple products, it's not the company—the problem is Steve Jobs. The [PowerShares] QQQ ETF is 19% Apple, "So the fate of this company is based on a guy who had cancer, had a liver transplant, and now is on a medical leave. Everyone's OK with that, but I'm not."
AdvisorOne canvassed some of the best investment minds—money managers and observers alike—to plumb their wisdom on what the long-term effect of the crisis would be on advisors and investors, and where the markets are headed.
Still, "if oil prices don't go above $150 per barrel, it could be a good year, with mid- to high-single-digit growth in the S&P," Stovall (right) said.
JEFFREY KLEINTOP
"The financial crisis has left investors with less time to save for their retirement and more ground to make up," Kleintop (right) said. "A purely defensive orientation is unlikely to achieve retirement goals for most investors."
MALCOLM GISSEN
Over the past two years, markets have healed and have regained both stability and strength, and morale is back in the ranks of investment advisors. From here on, Gissen (right) is cautiously optimistic.
