Last week in an exclusive interview with AdvisorOne, Ken Fisher, founder and CEO of Fisher Investments in Woodside, Calif., talked at length about his investing outlook prior to Japan's devastating earthquake and tsunami and nuclear plant crisis.
On March 16, as the humanitarian and economic effects of the crisis were still being gauged, Fisher updated the in-depth interview by telling AdvisorOne that he had made some changes to his portfolio holdings.
Fisher said that he had "increased weight in Japan and picked up some other things, mostly technology, on the presumption that things tied to [Japan] will" improve faster than many people think.
In the firm's regular "weekly commentary e-mail, we said we think this is largely a tragedy that is being expanded in the media."
"Rarely do people think they're hysterical when they really are," Fisher said, railing at media coverage of the unfolding tragedy in Japan—especially television. The story, he said, was being "reported as worse than things there really are." The media needs to be "responsible about how they are reporting this—TV is fanning the hysteria."
(Please read Fisher's full comments on Japan from AdvisorOne's March 16 storyand Part I of this interview.)
In last week's interview, Fisher, typically an uber-bull, said he had shifted his forecast from a strong bull market in stocks to a flat one, dubbing 2011 a stock picker's year. In another turnabout, Fisher, who's firm manages about $43 billion, has switched from a focus on emerging markets stocks to U.S. growth equities.
Developer of the price/sales ratio in the early 1980s, Fisher, 60, has been Forbes Portfolio Strategy columnist for 27 years. His latest book is Debunkery: Learn It, Do It and Profit from It (Wiley-2010).
Here are excerpts from Part II of the interview.
Your thoughts on big cap vs. small cap?
We're moving from what has been, for some years, small-cap leadership to the start of a big-cap phase. The thing that scares me, though, is that right now there are too many people who favor big-cap.
Do you ever invest in ETFs?
Yes, but not much. I prefer to own the underlying securities if I can. Because this is a pickier year, the more macro-oriented an ETF is, the less useful it probably is. So within, say, emerging markets, you need to be choosier: Some individual countries might do really well, but some might do really badly.
What's your biggest overall concern about the market?
Emerging markets countries might raise rates too fast. Those economies, which make up 27 percent of global GDP, have been on a tear. I don't want to see their central banks, which aren't all that good, become heavy-handed. There's fear they might jerk too hard and choke off growth. That would be bad. And it's not impossible.
What are your expectations for the bond market?
This is not a year when you're likely to do very well by owning bonds. I expect that market to be relatively flattish. No fireworks, positive or negative.
But what about all the worries over muni bonds?
