Ken Fisher for Forbes - 'Don't Be a Cud Chewer in 2013'
Negatives continue to abound. So why do I expect stocks to shine in 2013? Because I’m not a cow, I’m a bull. Let me explain: Most negatives you hear about are well known and widely discussed, digested and already priced into stocks. If it’s widely known, it’s either wrong or will have little impact on stocks. Fear of Europe? We’ve fretted over it for three years while stocks rose. Another Obama term—fully four years of fretting under our belts! The debt crisis—we will be fretting about that forever.
Markets are designed to price in all widely known factors. I see little now where the cud hasn’t already been chewed and rechewed. What’s a cud? A mass of semidegraded food that is regurgitated. It’s comfort food for cows and other herd animals. Following the herd can be dangerous to your financial health.
The herd’s latest obsession is the Fiscal Cliff. When Fiscal Cliff cud-chewing ends, they will rechew ObamaCare and then possibly Dodd-Frank. It’s all cud to me.
There is one fear I have that few are focusing on. It’s quantitative easing. I believe it’s actually contractionary and definitely nothing to be bullish about.
You should note that the actual broad quantity of money (M2 for example) has barely grown since QE1 began in 2008. Reserves grow, but the money supply doesn’t. Federal Reserve Chairman Ben S. Bernanke is paying interest on reserves and has flattened the yield curve. This has made banks less inclined to lend.
Continue reading here.