Salient to Investors:

Ken Fisher at Fisher Investments said:

  • Ending QE would be the most bullish thing we can do because it is not a stimulus – it flattens the yield curve and slows things down. We are doing well despite QE, not because of it. Historically, a steeper yield curve is more bullish for the economy.
  • Bernanke’s goal has been not to increase the quantity of money but to build bank balance sheets, which he has done very successfully. QE does not increase the quantity of money, which has gone up less in this expansion than in any economic expansion in our lifetime.
  • The Fed lies a lot. It has never been incumbent on central bankers to be open, transparent and tell the truth. If they did, somebody would trade ahead of them and profit.
  • The economy is in a slow but steady recovery. Markets move in advance of the economy – the stock market is one of the strongest leading economic indicators, which always predict the economy 6 months out. We have never, ever had a recession while LEI was high and rising.
  • The market looks at health care and doesn’t care.
  • If and when QE ends, long rates will rise and short rates remain low because the Fed keeps them there. The steeper the yield curve, the more eager banks become to lend.
  • Since 2008, the Fed has been using demand-side monetary policy which does not work. No bank will ever lend a penny when both short and long rates at zero.
  • Bonds will be flat or slightly negative in total return.
  • Fed chairs’ prior activities have not been predictive of what they will do.
  • Sam Peltzman at University of Chicago said people risk more when there are rules in place that make them think they are safer, and risk less when those rules are taken away.
  • Congress passes bills and worries about their details later: but the details end up getting honed to benefit those who are the most successful at lobbying.
  • During the whole shutdown the market did fine. Markets move in advance of such events.
  • We are slowly entering the back half of the bull market. John Templeton said bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. We have one foot in skepticism and one in optimism.
  • Everything takes a long time in bull markets. We are 5 years into this one and have not reached optimism so we have years to get to euphoria.
  • Twitter had a spectacularly successful IPO but most of the other IPOs that same week did badly, a sign there is no real optimism and euphoria.
  • Earnings are at all-time highs and progressing at a moderate rate, while revenues are growing at a respectful rate. Q4 will be slightly stronger than people expect, with 70% of earnings exceeding expectations.
  • The chance of a market crash in 2014 is remote – 2014 will be a good year. The biggest threat to the market in 2014 is unknown, and would most likely be caused by stupid government policy.
  • We are in a long bull market, so large, high quality stocks will reward. Pharma, tech, some energy, consumer staples. Midsize banks and non-European foreign banks take in deposits and make loans are attractive.
  • US stocks have outperformed the world but that will begin to equalize as emerging market stocks rebound and European stocks play catch-up.
  • Implementation of Dodd-Frank would result in RIAs being absorbed by broker-dealers within a decade.
  • The big broker-dealers have seen huge increases in concentration of market share – 20 firms have all the money and will keep getting more because they have all the lobbying power.
  • Many broker-dealers claim to be fee-only advisors when in fact they are not.

Read the full article at http://www.thinkadvisor.com/2013/11/21/ken-fisher-warns-ria-world-gone-in-10-years?ref=hp&utm_source=Triggermail&utm_medium=email&utm_term=Financial+Advisor+Insights&utm_campaign=Post+Blast+%28wealthadvisor%29%3A+FINANCIAL+ADVISOR+INSIGHTS%3A+Ken+Fisher+%E2%80%94+The+%27Naive%27+RIA+World+Is+At+Risk+Of+Being+Taken+Over+By+Broker-Dealers&page_all=1

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