Billionaire investor Ken Fisher says the stock market’s steady stream of skepticism is exactly what keeps the current bull market alive.
In a new interview on Fox Business, Fisher says widespread worry heading into the US midterm elections may ultimately support equities rather than derail them.
He notes that historically, midterm election years begin with noise, but the market tends to wake up and rally toward the backend of the year.
“So first, there are so many people worrying about everything. Everything tends to be worried, tends to have anticipation leading to mitigation.
But the fact is that midterms, what we have coming up in November, start off with a lot of squawk and end up with relative gridlock increasing and taking away the risk of big legislation, which means that investors for a couple of years thereafter can anticipate relative legislative risk going away disappearing stocks pre-priced that in the back of the years of midterms tends to be strong.”
In an article published on The New York Post, Fisher says that continued investor skepticism is bullish for the market.
“It’s all beautiful and bullish music to my ears, showing that despite broadly building optimism, the stock market’s wall of worry remains intact. And so let’s kick these ‘buts.'”
According to Fisher, as long as doubt and uncertainty persist, excessive optimism remains in check.
“When you get to the point where bull markets have fully climbed the wall of worry, that’s legendary. The ‘yeah buts’ go away. The reason it’s beautiful music to me is that the more I say, ‘Here’s five reasons why,’ and then I get six or seven ‘yeah buts.’
‘Yeah Buts’ are that which reduces the excess optimism back to a level that allows the wall of worry to continue climbing in the bull market.”
Fisher’s thesis hinges on the idea that markets advance not in the absence of uncertainty, but because lingering doubt prevents the kind of euphoric consensus that typically marks a top.
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