As Wall Street fears persist, so may stock rally: Ken Fisher

Thu Sep 19, 2013 3:40pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Wall Street often faces a wall of worry, the issues that can halt a market rally, yet the fears that haunt investors now seem to persist far longer than they did in the past, said Ken Fisher, the billionaire investor and author, in an interview.

The idea that investors and traders now have longer bouts of skepticism is important because climbing a wall of worry is a trait of a strong bull market.

Only when the last ripple of angst to fluster investors has ebbed and sentiment hits the euphoria stage, leading reluctant investors to jump in, do stock rallies finally peter out.

If Fisher's hypothesis is correct, the rally that began in March 2009 has more legs. Wall Street's biggest bugbear to keep investors awake at night - when the Federal Reserve will begin to trim its easy-money policy and by how much - remains up in the air after the Fed's decision to stand pat on Wednesday.

The rally this year has overcome fears about the fiscal cliff, the sequester, a potential attack on Syria and renewed concerns about Chinese economic growth. A fight in Congress over increasing the ceiling on U.S. government debt now looms.

"I'm not sure why, but it takes us longer to grind through our phobias and the world is not ready to cry wolf on the fear as fast as it used to, to disallow the phobias," Fisher said.

While Fisher told Reuters in an interview that he's sure that concerns on Wall Street have longer lives, he's unsure why that is, though he suspects the cause can be found in the changing nature of communication and its impact on media.

A prime suspect is the advent of news aggregators on the Internet whose quality is poor, putting people who might lack direct knowledge of a subject in the position of determining whether information is credible. That has prolonged the time it takes to fully decipher and debunk certain viewpoints, he said.   Continued...

Columnist and Investor Ken Fisher speaks to Reuters in New York, April 14, 2010. REUTERS/Brendan McDermid