저자: KenFisher · 외국인
요약 보기
Ken Fisher는 강세장에서 약세장으로 전환되는 심리와 신호를 설명하며, 시장은 '공포의 벽'을 타고 오르고 약세장은 낙관이 아닌 도취(euphoria)에서 시작된다고 주장한다. 강세장 말기 신호: 대중이 두려움을 잊고 '늑대가 나타났다고 외친 소년' 취급하는 것, 장기 금리차(수익률곡선) 역전이 이미 일어났음에도 무시되는 것, IPO 중 적자 기업 비중이 50% 이상으로 높아지는 것을 도취의 지표로 제시했다. 타이밍: 약세장은 보통 큰 폭의 완만한 하락(broad roll)으로 끝나며, 하락폭의 약 2/3가 마지막 1/3 기간에 집중된다. 투자자는 고점 대비 3개월 뒤 가격을 확인하며 대응해야 하고, 대중이 알고 있는 정보는 이미 가격에 반영되었으므로 '눈에 띄지 않는 큰 악재'를 찾아야 한다고 강조했다. 경기 관계: 약세장은 거의 항상 경기침체를 선행하며, 시장 바닥은 경제 바닥보다 먼저 온다. 미국 GDP는 전 세계의 약 23%이며 미국과 비미국 경제는 강하게 상관되어 있다. 침체의 주요 원인은 소비가 아니라 기업 투자·자본 조달 문제이며, 가장 큰 신호는 수익률곡선 역전이다(은행 대출 여력 감소). 출연자 전망: 2019년 4월 시점 강세장 말기 징후에 대한 경계를 드러냈으나, 구체적 자산 가격 방향에 대한 명시적 예측은 제시하지 않았다.
다듬은 글
[♪♪♪] [Naj Srinivas] Hello, and thanks for tuning in to another Fisher Investments Market Insights podcast, where we discuss our firm's latest thinking on global capital markets and current events. I'm Naj Srinivas, Group Vice President of Client Communications here at the firm, and today's episode, I actually want to share an interview we recorded with Ken Fisher, Executive Chairman and Co-Chief Investment Officer at Fisher Investments, about a month and a half ago, going back to late October, early November, and in that interview, Ken shared his thoughts on bear markets, how a bear market forms, but also the anatomy and timing of a bear market.
So I'm going to lead you right into that recording right now. Please enjoy, and I'll rejoin you all at the conclusion of that interview. So today, Ken, I want to talk a little bit about bear markets. This bull market has actually turned 10 years old earlier this year, and it surpassed the 1990s as the longest bull market in history, and that has many investors concerned that the next bear is surely right around the corner.
What are some of the ways that bear markets unfold, in your experience? What are some of the things that you're looking out for to understand, well, is this bull market coming to an end, and do we have a bear coming up at the onset here? [Ken Fisher] So there's a lot you can say on that. First, the transition of a bull market into a bear market, in some ways, is a virtual standing on its head of the prior psychological processes.
In the course of a bull market, people worry a lot. The worry maintains itself at fairly high levels, or in the age-old saying, "The market climbs the wall of worry." John Templeton's famous line that "bull markets are born with pessimism, grow on skepticism, mature on optimism, and die on euphoria," is almost always correct.
It's not always correct, but it's almost always correct. [Srinivas] What does the change from optimism to euphoria really look like? [Fisher] When you get to that transition point, hopes have been very high. People have gotten to where they stop worrying, and there are bad things that are of two forms that occur.
One, surprises that no one notices at all, and surprises that people just overlook. So it's common during a bull market for people to be afraid of things like the market's price-earnings ratio, or some other valuation formula being too high. It's common for people to worry about the yield curve flattening.
We've seen a lot of those-- you can't find a week this year in America or Europe where there haven't been major media talking about "The market's risky because the P.E.'s too high." This year, there's been a huge amount of media discussion about how the yield curve is flattening. Not flat. Not already inverted, but flattening.
Those discussions warning in advance are actually bullish. [Srinivas] And why is that? [Fisher] Because the fear's in the market now. When you get to the top, those kinds of things stop playing. They begin to sound to people like the boy that cried wolf, because, "Yeah, I heard that. I heard that. I heard that.
I heard that." And you get to where now the yield curve, domestically and globally, is already inverted. Short rates are above long rates. Banks have stopped lending, or are lending at a vastly reduced rate. And when you say to someone the yield curve inverted, they just ignore it, or nobody says it.
In the history of yield-curve inversion, which has happened very often, it's just ignored then. Likewise, then you get the big surprises that no one notices, thinks about, talks about, even sees until maybe the bear market's completely over and the recession that goes with it is completely over. For example, in the last downturn, FAS 157 and ISB 157, a market-to-market accounting domestically and globally wiped $2 trillion off of bank balance sheets without anyone noticing that that was actually happening as it was happening until it was too late, and the bank's balance sheets were too impaired, and the lending hedge shrunk, and we actually started shrinking the quantity of money in America, a terribly dastardly thing to do, which, again, at the time it was happening, it was not widely perceived.
The good news is that the whole purpose of the market is to sort of be the great humiliator, humiliate as many people as possible for as long as possible, for as many dollars as possible, and it wants to get you and me, and it wants to get your mother, and, you know, your crazy Aunt Matilda. And the fact is that in the latter portions of a bull market, you get increasingly people who are too afraid to be invested before, who, as that wall of worry starts to go away, start seeing opportunities in things.
And you see that in lots of speculative forms. One of the easiest ways that we measure routinely is to look at things like the percentage of IPOs. Probably most listeners know what an IPO is. IPO stand for "It's Probably Overpriced." [Srinivas] And, of course, IPO actually stands for "Initial Public Offering," and what Ken is referring to is that people value IPOs at a much higher price than they really should, because it's a price for the issuer, not the buyer.
[Fisher] The percentage of IPOs that are in companies that are not making money has been one of many relatively good measures of euphoria when that gets to be where it's well over 50% for a reasonable period of time. We have a pretty euphoric world. Usually, it's much lower, because the people are too afraid of IPOs that don't have much money because they're afraid of its speculative quality of euphoria.
And you get to this point where the latter money coming in, which you could think of as the greater fools, is going to cushion the peak. And when I say "cushion the peak," what most people fear is a bull market that leads to a spike top and drops sharply. The reality is that there's another age-old saying that people forget, which is that "bull markets die with a whimper, not with a bang." The fact is, at the end, they roll over if you measure them correctly, in a big, broad, slow roll.
If you think of the world market, or the totality of the U.S. market, or the totality of the foreign market, but not necessarily a narrow slice of the market, they never spiked up. The broad market has a big, broad roll. [Srinivas] Ken, is that true even in the most extreme market cycles? [Fisher] Even in 1929, the global market had a big, broad roll that lasted a year, and that big, broad roll exists because, as it starts to go down, the last greater fools see that as an opportunity to get in.
They're buying the break. They've learned to buy the break because throughout the course of the bull market, buying the break always worked, and they've been trained to buy the break, and they're buying the break as it starts to go down and the market drops 8%, 9%, and they see this as their opportunity to get in for the leg moving up into the great future ahead, and it's then after that broad roll that the market starts getting treacherous.
Typically, 2/3 of the percentage decline of a bear market occur in the last third of its life, the last third of its time. In the first 2/3 of its time, you only get one third of the percentage drop. Bear markets get more vicious as they go along, into a very steep, downward V-shaped pattern. They bounce off the bottom, too, in a V-shaped pattern.
But the decline gets steeper as you go along. The early parts are gentle. That's how they suck the money in. The reality of that suck-in, if you will-- and I don't think it surprises anyone that bear markets suck-- the reality of that suck-in, if you will, is that it offers a benefit. You don't have to get out in a super hurry.
The early months of a bear market are not vicious. It's the later months in a bear market that are vicious. One of my old rules that I wrote about, now over 30 years ago, is that you never get out of the market until three months after you've seen higher prices. You have to see higher prices three months earlier because that broad general roll will give you a relatively small decline a few months out, and then what you're doing is looking back to see something that's already happened, and you're looking for these bad things in a world where people are hopeful.
The key to doing this well is to look back, not anticipate a world where you've already had higher prices three months earlier. So earlier this year, for example, we were very nervous looking at higher prices three months earlier, and saying, "Where are we?" until the market bounced back. But you're looking at higher prices to say, "Can you see these bad things going on that aren't pre-priced?" Because the nature of the market is to pre-price all widely-known information.
It's the things that people aren't noticing that are bad and big that get the market. Now, let me talk about this in one final way. Not always, but almost always, a bear market is leading into a recession, and then the market will actually bottom before the economy stops going down. The history of that is 100%.
The market bottoms before the economy bottoms. The market peaks before the economy peaks. The stock market is one of the classic leading indicators formerly. It's one of the conference board 10 leading indicators, for example. So when we in our world today, and, actually, for a very long time, have a recession, so does the rest of the world.
The U.S. and the non-U.S. are so correlated economically that you never get a U.S. recession without having a non-U.S. recession, and vice versa. Single countries otherwise can have their own problems and their own recessions, smaller countries, but the totality of the U.S. and the totality of non-U.S.
economically correlate. [Srinivas] It's that old saying, "When the United States coughs, the whole world gets the cold." [Fisher] But when the rest of the world coughs, America gets a cold, too. It runs both ways. We are only 23% of global GDP. We're the biggest single country economically, but we're only 23% of global GDP, and that other 3/4 actually has more power on us than we have on it.
We have, in our country, hugely tremendous things that many other countries don't have, but the fact is that other part of the world that's three times our size is very powerful on us. The point that I'm wanting to get to is to get to that recession in that global economy, which is currently $80 trillion U.S.
in size, that's normally growing at some rate like about 3%, with a couple percent of inflation, which gets you to about 5% growth in dollar GDP, that means that 12 months later, that $80 trillion of GDP globally would become $84 trillion of GDP globally, and so what you need to create that recession are big, bad things that turn that $4 trillion of GDP growth into a negative number, and of course, maybe a negative number of some size.
So you're not talking about $100 billion of bad over here, and $200 billion of bad over there. You're talking about one or more things big enough to aggregate to that. So you're looking for big negatives. You're not looking for little negatives. You're looking for big negatives that everyone's become blinded to as they finally got toward that euphoria function.
[Srinivas] What are some examples of those really big negatives that historically have knocked a significant amount off of global GDP? Those wallop-sized events? [Fisher] The biggest one is an inverted yield curve, because when-- the core business of banking is and has always been taking in deposits as the basis of making long-term loans, and when short-term rates get above long-term rates, the gross operating profit margin on a credit-worthy lender and borrower that are otherwise comparable becomes actually negative, and, therefore, you get a negative gross margin on the subsequent future loan, unless the bank gets crazy with risks.
The banks typically don't, and in that process, they start reducing their lending, and as they reduce their lending, they chop off the lending to the least credit-worthy borrowers that they have, which you could think of as the lower-quality businesses that need, you know, ongoing credit lines and what have you, and in the process, those businesses have to re-trench, and as they re-trench, which again, very simply said, is the beginnings of that portion, which leads to recession.
The function of that FAS 157 and ISB 157 that I mentioned earlier to $2 trillion reduction in bank balance sheets, if you reduce bank balance sheets, you reduce their ability to lend. Often, but not solely, it comes from that-- what it doesn't come from typically are the things that many people think it comes from.
It doesn't typically come from things like consumers deciding they're going to stop buying. Consumption expenditure as a percentage of GDP is rigidly tight, and about a 4% bandwidth over history. That is, even in recession, and the very biggest recessions, consumers rigidly fight reducing consumption.
Consumption rises as the percentage of GDP in a recession, but it still fits into this tight bandwidth. We don't really get a world that many people think that is a consumer-led recession. What we get is a business expenditure and investment-led recession, often tied to the inability of the businesses to figure out how they get capital or keep the borrowed capital that they had.
[Srinivas] Ken, it's been a little while since we've actually seen euphoria, the last time being, of course, the tech bubble of 2000, 2001. Investors' minds or memories being what they are, what are some of the things that they can look to to understand what euphoria really looks like? How does that actually feel?
[Fisher] So a shamelessly self-promotional plug, chapter eight of my "Only Three Questions" book pretty well covers a lot of that, but what people can recognize is not so much necessarily how they feel, but how others around them behave. So when you see your cousin, who before would never own equities, but is now buying cannabis stocks and trading them pretty regularly and bragging about it, that's one sign.
That by itself doesn't-- you can't extrapolate that to totality. The feature of people telling you you've got to get into the IPOs that they're getting into, that people that would be necessarily, again, maybe trading cryptocurrencies, if cryptocurrencies were hot. These are all the beginnings of the bubbling of euphoria, but the real telltale feature, in my opinion, is that the things that people worried about before, people just stop worrying about.
You see people treating prior fears as the boy that cried wolf, whereas before, they actually feared them, so, you know, your first cousin told you, you know, for a long time, that the market couldn't do well because we had too much debt. The market couldn't do well because P.E.s were too high. The market couldn't do well because of, because of, because of, and now you're talking to him, and it's a year later.
It's Christmastime, and your cousin's saying, "Ah, nah, you don't have to worry about that. Nah, you don't have to worry about that. Nah, you don't have to..." I'm not suggesting that the things that I cited are necessarily trigger mechanisms. That's not where I'm going. Where I'm going is the things that he was afraid of before he's not afraid of anymore because it's all boy that cried wolf to him, and he's in a, "Ah, nah, nah, nah, nah." It's easier to see the euphoria in others than it is to see it in yourself.
I want to reiterate, that doesn't tell you you've got a top. That tells you you've got euphoria. [Srinivas] That's all we have time for in today's episode. I hope you enjoyed it. For more of Ken's thoughts, I invite you to follow him and his quarter of a million more followers on Twitter. His Twitter handle is @kennethlfisher.
He posts to that very regularly, and if you enjoyed today's podcast, I also invite you to listen to our last episode, our December 2018 episode, with Michael Hanson, senior member of our research department, and a member of our investment policy committee. We talked about recent market volatility, our views on what's driving that volatility, and our expectations for the market moving ahead.
That plays into this episode very nicely. And if you have feedback on any of our episodes or our podcasts generally, ideas for other topics you want to hear us talk about, please email us. We'd love to hear from you. Our email address is [email protected]. Thanks so much for tuning in. [woman] Investing in securities involves the risk of loss.
Past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments, and should not be regarded as personal investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. Copyright, Fisher Investments 2019.
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