Ken Fisher for Forbes - You've Got Questions? I've Got Answers

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Mar 26, 2015

I hear so many questions that have fast, easy answers. Here are a few:

“Small stocks have lagged. So should I dive in now?”

No. Correctly measured, they usually lag–except the first half of bull markets, when they supersoar. They will likely lag overall until our next bull.

“I read lots about deflation ahead and how it’s terrible for stocks. Is it?”

Depends! Usually deflation comes from bad recessions–and is ugly. Otherwise, like now, it’s okay. Ignore those gloomy voices, many of them the same as those who earlier foresaw quantitative easing as causing mega-inflation. Also, whatever you read lots about is surely priced in and easily ignored–a great answer for so many media-splattered topics.

“I really need income. Should I prefer preferred stocks?”

Only if you’re a great trader or great fool! Preferreds trade only a whisker away from junk bonds on the one hand and junk equity on the other–all highly correlated to small-value stocks. If small value lags, preferreds should prove painful–yield or no. See what I said above about small stocks.

“Aren’t we in a new era of currency wars–analogous to water swirling a drain, then down and out?”

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