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Are you worried about stock market volatility? If so, you're not alone. So many people are trying to figure out what to do in this time of uncertainty. So, we wanted to speak to one of the world's best known investors, the self-made billionaire Ken Fiser of Fisher Investments. Coming up in this video, Fischer shares his investing philosophy, and we'll get his take on the current market environment.
All right, let's get started with this week's ticker tape. Hey Caroline. Hey John. It's great to have Ken Fischer on Tick or Take today. We're really excited about it, especially just because there's been so many questions about the current market turmoil. Yeah. And I'm sure many of you are familiar with some of Ken's books.
He's someone who's made investing accessible to everyone over the years, which matters to us because we hear from so many small investors and in a lot of ways he helped to pave the way for anyone to get a piece of the Wall Street dream. Absolutely. and and Ken has navigated many a bull and bare market over the decades and we wanted to get his perspective on that and get his perspective on the current markets and we did you'll hear that coming up but first we asked him about when he first got interested in investing sometime during college I think uh you know at one point in time I wanted to be Yogi Barra and then uh later after that I wanted to be Floyd Patterson and that didn't last very long cuz he didn't last very long then I wanted to be Muhammad Ali and that wasn't going to happen.
Uh but then I grew up and then I wanted to be in forestry and then I decided in forestry school that that'd make a lousy career so I had to do something and as the saying goes in those days which was you know over a half century ago uh investing was inside work with no heavy lifting. It's good. And were there any early lessons that helped you along the way as you started your investing journey?
Lessons is a relative phrase. I think the most important thing that ever happened to me uh was that I was a baby brother and baby brotherisms dominate everything I've ever done. Uh my older brothers were bigger, stronger, smarter, obviously more experienced as I was growing up and I learned early on that anything that I wanted that they wanted, I was going to lose that.
So I had to figure out something good that they didn't want and then I could get it. And so that part about figuring out something good that other people don't want was central and has been central to my life ever since I was a little kid. And including every part of the development of my firm, every part of investing, uh, pretty much every part of me, including my wife, uh, is, you know, finding something good somebody else didn't want.
There are so many people out there that haven't necessarily started and they're curious about how to get started in investing based on your own experience and all of these years of experience you now have before somebody puts a single dollar to work in investing. What's the first thing they should think about in your opinion?
I guess that kind of depends on how old they are. Uh but as a general rule, when I first started in in the investment world in that first year uh in a world that is different than now, I went to a series of local libraries where I was and I got investment books and I read 40 investment books in the first year.
And if you're going to spend your hard-earned money on stuff that may blow up in your face, I think it's a good idea to do something sort of down that line that kind of covers the waterfront of what all kind of different people have to say. And then you sort out for yourself who you really think you are.
And uh you know, there's an old saying uh in the market that uh the market's a place where uh someone with experience gets uh money and someone with money gets an experience. And uh I think the most important part uh you know as as Ben Graham famously said uh is you more about controlling yourself than any other thing and therefore learning who you are and where you fit into these things relative to the views that so many different people have had about investing is pretty central to it.
Otherwise if you're not going to do that you just do what's impossible for most people which is be a passive investor. invest in indexes passively. The problem with that is that most people don't do it because the average passive holder only holds the instrument that they hold for about 18 months. Uh that you know that the the longevity of holding is is dominated by people buying at the wrong time and selling out at the wrong time.
Now, with all that said, a and the reality that uh everybody is different, there are so many different approaches to investing, so many different styles out there. For you at the end of the day, if you're trying to value a business for the purpose of investing potentially in that business, what do you think is the right approach?
Well, at first I'm not sure there is one because again it comes back to what's that you do and so you're really asking me a question more about me than about the investing universe as a whole. But uh the the the biggest thing that always moves investments is the difference between what current expectations are about that investment and what future subsequent realities are.
If the future subreity subsequent realities are better than current expectations then it's going to do great. even if it is great but the current expectations are too great and so the future isn't as great as the expectations it's going to do badly and so you know the way I usually think about that is what's the inverse of the PE or the earnings yield earning divided by price compared to long-term bond rates and how do I think that will be different relative to earnings five years from now versus what people think now and most people aren't thinking out five years anyway.
And there's a reason I think that way as opposed to some other time frame uh- which is that's beyond the time frame that stocks currently want to value. Stocks don't value in the long term. But if you just take for example recent years, wellknown tech names, big famous did great and value stocks didn't.
Um there are reasons for that and you got to know a fair amount to figure that out in advance. And as I said at the beginning of the year uh in all of my writings, this is a year where value stocks do better than growth stocks. And that switch is not easy to explain uh in five minutes uh in a in a in a podcast.
But it comes down to assessing the expectations and accessing the future reality. And that's always been what investing is all about. whether it's in real estate, of which I'm not a super real estate guy or anything like that or any other thing. It's about expectations versus subsequent future realities.
Now, since you talked a little about growth versus value, um, and again, everybody's different. Uh, but for you, uh, the ability to, uh, navigate both of those paths as opposed to just saying, I I I'm going to be focusing on growth or I'm going to be focusing on value. How important is that mindset in your opinion?
So, let me describe that this way. Um, there's dentists and dentists are needed and then there's veterinarians and I guess veterinarians are needed if you got pets and critters. Um, but there's not very many people that are very good at doing both. And yet, if you actually understand how stuff works, you ought to be able to do both.
uh most of the investing world has tried to treat what they do as if it was a craft and the problem with that is markets pre-pric all widely known information and craft is widely known information so craft is largely pre-priced you just have to understand what it is that's different that would make value stocks do better than growth and vice versa and there's a different way to look at value stocks than there is to look at growth stocks and all that isn't appropriate for the person that you mentioned earlier that's just first starting in investing because that's like asking somebody to, you know, run a a fast race before they've actually learned to run at all.
But ultimately, uh, there's no reason someone can't be a sprinter and a long distance racer both. And I guess some people are getting that learning lesson because it's been such a volatile year. I I do want to get your perspective on the markets right now, your current observations and and your outlook from here.
How are you thinking about where this market goes? So, you know, I've written about that in the Globe and Mail. I've written about that in uh New York Post and I got columns all over everywhere. And uh the fact is this is a year where America lags non US leads Europe in particular should be strong and that's an entanglement between two things that happen at the same time.
One of them is a country effect and the other is a value effect. Earlier I mentioned you know technology haven't done well for a while. Well, you know, if you go back to 2024, technology and tech like telecommunication services stocks made up over 40% of the S&P 500's market cap. So, when they did well, of course, the S&P 500 did super well compared to places like Canada or just pick one out of thin air, Germany that are more valueoriented and uh not, you know, outside of the United States that that tech growthy world is is but a much smaller part.
It's you in aggregate less than 9%. So in that period it's logical that the US would lead, non- US would lag. Uh now as we move into a world where uh President Trump shoots America in the foot and value otherwise leads anyway, the places that are valuer rich uh do better. Uh let me say that differently.
The places that Donald Trump attacks do better than the places he doesn't. Uh the places that uh are valueheavy regardless do better than the growth side. Uh those two entanglements, value and country effect outside of America. I mean, if you I'm always staggered at how many people don't really pay attention to what's going on outside of their country.
I'm I'm going go back to my stock market tie with all these little countries on it that I'm wearing today. The fact of the matter is America, biggest economy in the world, biggest stock market in the world, is still only a quarter of global GDP. And non US and US GDP tend to correlate positively over time.
Uh, and to understand what's going on in the world in your country, you also need to think about what's going on in the world outside of your country. And most people, so this year, for example, people are stunned when I say to them how much better the non- US stock market is doing than the US stock market is doing.
And they almost have a hard time believing it. I mean, you know, Europe on average up 13% this year. America's down 8% plus. Uh that spread is gargantuan. And given that you've navigated so many market cycles over the year, uh, everyone can have its own rhythms, but if people are trying to figure out, okay, well, uh, you're outlining what we've seen so far in 2025, uh, how do we know if these trends last longer than normal?
Um, how are you thinking about how long the current investing trends we're seeing play out in the market? Well, first we never know. All of this is a likelihood game, not a certainty game. Certainty, knowing implies certainty, right? Uh that Warren Buffett said a long long time ago, largely forgotten that the investing realm is one where if you're right 70% of the time, you end up in the long term being a living legend, which means you better be comfortable being wrong fully 30% of the time.
And the game is to be right more than wrong. Everybody's wrong a lot. Uh now that having been said, I believe the trend that started will continue uh at least through 2025. I don't make long-term forecasts for stock prices. I I never have. Uh I don't believe that's a feasible function based on the way forecasting can work.
But I believe this is a good year in the market if you can accept that you underweight America and you underweight growth uh and you spread out in the rest of the world. Uh and I think the trend that started will continue uh beyond 2025. I don't have a forecast at this point, but you can invite me back next year.
We can talk about it then. We would love to have you back for that. Ken, I guess just to put everything you've talked about in context, you talked about how the winds have changed uh in 2025, the uncertainty, obviously people are feeling that right now, but having been an investor for so many decades.
Um what would you say to people about being invested versus not being invested at all? So, let me be real simple because I get asked that question all the time. In the long term, the market works. In the long term, the market works because it's a reflection of aggregate capitalism. And in the long term, while people will not accept this, the market's a pretty rational valuer with a lack of perfection time to time, moment to moment, a lot of volatility, but in the long term, it's a pretty rational valuer of what the future is giving us.
And the key in the long term is to recognize that capitalism has an amazing ability to adapt to whatever's thrown into it and there thrown at it and therefore becomes more valuable over time as it builds uh and grows because it's adaptive. Every good physical item that you have somehow came to you via capitalism.
somebody at some some crazy guy at some point in time came up with a never- yet done thing and and more recently more commonly in services than in uh in in goods that you liked and therefore you in your decision to said I don't want that I want to buy one of these and that all comes from capitalism capitalism captures the value of that and the stock market in the long term is the holy grail of capitalism and I'm very optimistic about capitalism's ability despite many setbacks and many problems that it faces in the world at moments in time for all kind of different reasons to overcome and wiggle around all those and move to progress.
And so therefore that is in and for the most part more people starting out in investment on average are younger than they are older almost by definition. Uh not that many 105 year olds are starting out in investing. And as you think through that, you say to yourself, if you're 50 years old, for example, in in today's world, you're probably going to be living until you're 85.
That's 35 years. Try to find a 35 year time horizon where stocks hit and beat the Dickens off of pretty much every other form of liquid asset you could possibly imagine. And I believe that same trend continues. Another way to say that is, you know, in history, which you can measure either through the Footsie in Britain going back to almost identical time periods that you got accurate pricing with the S&P 500 in America, the 1920s, stocks rise three periods for every one period they fall, and they rise more in the rising periods than they do in the falling periods.
And that's a pretty good thing. Ken Fisher, we can't thank you enough for sharing your insight and analysis with us today. It's been a true pleasure. Thanks for having me, Tom. I do appreciate it, and I do appreciate you. And I appreciate what you're doing for people by educating them. All right, that does it for this week's tick or take.
A friendly reminder, this video is for information purposes only, not financial advice. Our thanks to Ken Fiser. We put some information about Fiser and Fiser Investments in our description. Our thanks, as always, to Caroline Lesley. Be sure to check out her socials. And if you liked this video and you want to see more of our investing segments, don't forget to subscribe so you don't miss our next investing video. See you next time.
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