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History of this is positive all but one time on average return of 19.8%. This is the most consistently positive period in all of US stock market history. We're in the latter stages of a bull market where sentiment isn't euphoric yet, but it's pretty optimistic. Nvidia is my largest holding and has been for years.
The reality of government interference in markets is counterproductive. I think markets want to teach government leaders a lesson. We are absolutely delighted to have Ken Fischer, the founder and executive chairman of Fiser Investments with us on the show today. Fisher Investments is a premier investment firm serving high netw worth individuals, families, and institutional investors, and they have $450 billion in assets.
Uh Ken, it is a great pleasure to have you on SPRO TV again at the New York Stock Exchange. Thank you so much for coming. It is always great to be with you. You do a great job interviewing. It's always fun. Oh, thank you so much. So, you've talked a lot about the midterm miracle. Um the last quarter of of this year would be the last quarter of this year and the first half of next year.
One concern I do have is the market really hasn't looked back since the the rally after situational awareness and is there any concern that we are within a couple of percent of the all-time highs in S&P 500. Is that midterm miracle still going to happen? So yes, but let's put that in perspective quickly.
First, when you look through the history of this, which is a history that goes back over 100 years, the every four-year pattern is consistently nine months of positivity, but sometimes [clears throat] it's more and sometimes it's less. The consistency has nothing to do with the prior returns of the market.
That is, when the market's done really well, it's happened. when the market's done badly beforehand, it's happened. You can actually track it against both occurrences. All the years when the market's been positive in the first nine months, all the years when the market's been negative, you still see the trend.
This is the part that's tricky and I can't explain to you. There's no consistency about prior with how big the nine months might be. There's consistency of it happening. How big it is varies. I see. I see. Well, I was hoping for 10% pullback I can get right in, but looks like I'm just I think I I mean 88% of the time or 90% of the time, that's pretty darn good odds when I talk about.
So So mind you, let's just be clear, there is nothing about this that doesn't mean you couldn't have that 10% pullback within the nine months. Right? You could have, and I'm making this up out of thin air, you could have the market drop 10% in December, have a negative quarter and still have the nine months be not only positive, but positive by 15, 18%.
The history of this is positive all but one time and on average return of 19.8%. Well, as you've always taught, it's time in the market, not try not to time the market. But this is the most consistently positive period in all of US stock market history. And then the other part that's important to keep in mind and particularly for Koreans is that the world markets tend to correlate positively.
So when you think of a market that's as big as the US market is, what's good for the US market tends to ripple over and help the Korean market some too. And in the period that we can measure Korean stocks accurately, the midterm miracle has also worked in Korea. That's a great point. Uh I wanted to ask yesterday in the other day, Nvidia announced another $150 billion buyback authorized it.
So now up to 235 billion seems like a tremendous amount of money. And certainly people ask, aren't you better off giving this out as a dividend? And there's some tax implications. But what I want to I want to get your thoughts on is there a signal on buybacks if do you have an opinion on buybacks in general?
What do you think when you see a headline like that? So I wrote about this concept not invidia but I wrote about this concept in my 19887 book the Wall Street Wall and I wrote about it again [clears throat] uh in 2007 with in my only three questions book. The occurrence of a single company doing buybacks doesn't really give you much.
But if you look at when buybacks grow as a whole, as they are in this time period, it's a statement of CEOs becoming too optimistic. It's actually a negative sentiment indicator. It's another one of many indicators that says we're in the latter stages of a bull market where sentiment isn't euphoric yet, but it's pretty optimistic.
As you've said, frothy, but maybe not not euphoric. So frothy, but not bubbleicious. What now? Nvidia is trading at I mean it's a very big company, but it's trading 17 time 17 times forward earnings. Forward earnings estimated, of course. Uh it's at lows in about a decade. Is it actually a good time for Jensen to go and say, you know what, my stock is relatively cheap.
Is this a good time to buy? So, first, I don't really have a specific answer for that in this way. When you think about this, if the earnings forecasts are correct, yeah, it's fine. My old friend David Dreamman from decades ago did the research and did a very good job showing that earnings forecasts are wildly inaccurate.
The fact of the matter is they do the forecast as best they can, but there's all kind of unexpected stuff ahead. And so, do those earnings really come through or not? You can't bank on that. The fact is, Nvidia will be okay no matter what because in the long term, Nvidia is in a special position. As a disclosure, Nvidia is my largest holding and has been for years.
It I would think of as a long-term hold. I wouldn't get too caught up on whether this buyback is short-term bullish or not. I see. Um, staying with the tech space, uh, Aura, the the the ring folks that track your health. In fact, I've got sort of one right here. They, uh, they had a $2.2 billion IPO, I think, and they pulled it even though it was four times overs subscribed.
Is this being a little too clever? If you get a chance when markets near all-time highs, is that a is that sending a signal that they're pulling the IPO? And there were a couple other companies that pulled IPOs recently. Yes. And oh, by the way, this is an interesting feature because you know exactly how the SpaceX offering works.
And nobody wants to be the next Space X offering that gets a lot of excitement and then duds. The dud part is actually scary to most folks. They'd rather pull it and let two, three, four more go first and then if those go okay, then go. Cuz what they really want is they want to do the offering at a very high price that's good for the sellers and then have the stock go up anyway.
I I I get the thinking. But geez, if you let Anthropic go ahead of you and let's say Anthropic does reasonably well, it's going to suck a hundred billion dollar whatever the number happens to be out of the market. I just wonder if they're being a little too clever by half. Well, there's no real way to know that for sure, and they might be.
The fact of the matter is that in the past, IPO trends tend to go on for a fairly long time. We didn't really have a lot of IPOs up to now in this cycle. We've had a posity of them and then we had the big one with SpaceX. That one not doing so well has caused these people to think, do I want to have the dismay of being the second one that kind of fizzled after the offering and it would help them a lot if SpaceX turned around and went back up and SpaceX has been behaving a little better, but it's still underwater.
People don't want to be the next guinea pig. I see. It makes sense. So maybe this concern is another way of saying it. The market isn't euphoric yet. Well, let's think about Yeah. Oh, absolutely. And let let's think about this one other way. The fact of the matter is these companies that we're talking about are all fundamentally strong.
This is not like the '9s where you had companies going public on burn rate, not making any money, not having a gross margin, a lot of them not having any revenue. These companies don't have to go public if they don't want it. they can afford to wait and b their time even at the risk of having a worseer offering in the future.
They'd rather have the offer look good and be cool guys than look bad and be seen as disappointments. That's a very very good point. Uh recently you spoke about the idea of you want to be invested globally as well uh and not just in the US and certainly our Korean clients would you know are probably a heavily in the US but also in Korea.
Um at this stage would valuations frothy but not euphoric. What on on average what do you think a good um percentage of your allocation in equity should be global versus in the US? So my advice to people, and that's a little different for Korea than for a lot of others because the Korea market is so much what I refer to as two stocks and a long tail.
The fact is that two stock feature that we all know makes the Korean cap weighted index exceptionally volatile. For good or for bad, both. In my mind, it's more important for the Korean investor in a country that I, as you know, admire greatly to be thinking more globally. So, there's some picking and choosing to be done there.
But you made the point, and you're right, that a lot of Koreans will also think about the US, but then they're likely to also think about US in categories that tend to correlate with those two stocks. tech, [clears throat] AI, all that stuff. It's, I think, important to think about other categories that may not do as well, but provide you diversification in case those categories don't.
And that would include things like industrials and as a counterweight healthcare. And in reality, Koreans ought to have a much more global orientation and a fair amount of their money should be outside of Korea, outside of America, and in other places that would include Japan, which is heavy in industrials, would include Europe, which is heavy in industrials, health care from around the world, and because it's such a big weight and it's not helping this year, but it's really important and it helps a lot of years healthcare and then finally there's the energy part
right um so for for the for the American audience 20 20% outside of the US no in the United States I would say so so think about it the United States is um if you look at the Msei world not the all world you know it's twothirds of the weight uh you you know you you really want to be fully a third outside of the United States.
That's a that's a great great great benchmark to think of. You know, recently you said something that really resonated with me and says what you have to worry about in the morning that'll never happen again. Uh the unknown unknowns that the that what really is you know if if it's sort of known and talked about you know people have people have priced it so but the unknown unknowns people haven't priced it.
So, a couple of things that in this market that we we would never see in the 80s and the '9s where a lot of government sort of potentially interfering in the markets. One is uh a diesel export ban which keeps have been bandied around more and more the past couple weeks. But one thing that concerns me and I wanted to get your thoughts on just the idea of government intervention and how you think the markets will and should react to it is what if you know with the 20 and 30 year with the long end of curve really going much higher.
Imagine if the Treasury said you know we're going to indefinitely suspend 20 and 30-year bond issuance. Uh that would cause the shorts out there some pain I would imagine. What? Um, well, when you say the shorts, you mean they're shorting bonds, bond prices. And I think if the think about it for a second, if the US government tried to put controls on long rates, it would make long rates go through the roof globally.
If you think about that, there would no be no supply and there would be panic and the foreign market would be buying um you know would be selling bonds driving the rate up. It would be counterproductive. The the reality of government interference in markets is counterproductive. The so-called ban on diesel is just uh to be blunt about it stupid.
The problem with diesel is not the price of oil. The problem with diesel is the dislocation that's occurred because of the Gulf War in getting the oil to the refineries that will produce the diesel. And the refinery capacity is very limited. You can't put in place a refinery quickly. It just can't be done.
Uh in parts of America, you can't build a refinery no matter what. and there hadn't been one built in decades and decades and decades and decades. The notion that the government knows better than the marketplace is almost always false and interference is in in a market that operates relatively freely is almost always a fool's errand.
I I guess the thinking is ahead with weeks into a very very tight potentially fraught election the heartland might appreciate diesel prices down 50 cents to a dollar I think is the view uh and also I'm just surprised that I'm in you know I really appreciate your insight but I just thought if you pulled out insur we're now no longer issuing 20s and 30s all the insurers who need the duration will be like we got to grab whatever is out there so I thought maybe at least in the short term would have the desired effect of bringing long rates down at least in the class.
I don't think so. I don't think I think markets are smarter than that personally. Uh I think markets want to teach government leaders a lesson. Uh and think think of when um Treasury Secretary Besson in the United States was working for George Soros and if the British government had tried to do that,
if you follow, right? What would have happened? What would have happened is they would have gone like that to the British government. The United States is a little more than the British government, but the United States is still something that the world of capitalism is ready to do that to when necessary.
That's great. Well, Ken, thank you so much for joining us again. Thanks for having me. It's always great to be with you. Forward to seeing you again. Always great. Thank you. Thank you.
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