Has Ken Fisher lost his touch?
My forecast is for the GOP to lose three seats in the Senate and six in the House. Sometime before the election the market will perceive this likely outcome and will move upward in response.Reality, November 2006:
Jim Webb's victory over Sen. George Allen in Virginia assured Democrats of 51 seats when the Senate convenes in January. That marked a gain of six in midterm elections in which the war in Iraq and President Bush were major issues.Ken Fisher, February 2007:
Earlier, State Sen. Jon Tester triumphed over Republican Sen. Conrad Burns in a long, late count in Montana.
With a handful of House races too close to call, Democrats had gained 28 seats, enough to regain the majority after 12 years of Republican rule and place Rep. Nancy Pelosi of California in line to become the first female speaker in history."It was a thumping," Bush conceded at the White House. "It's clear the Democrat Party had a good night."
Housing Boom!!!Reality, March 2007:
Don't buy it. For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007's housing disaster turns out to be. Well, there won't be any housing disaster. We won't have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.
You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn't be so strong now.
Did you know that housing sales are up in the last few months, not down, and that inventories are lower than six months ago? We're accelerating, not landing.
"I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,'' D.R. Horton Chief Executive Officer Donald Tomnitz said at a Citigroup Inc. conference in New York. "Our future is not as bright as what we would like it to be.''
I've got a lot of respect for Fisher's long-term track record. And a lot of people got the 2006 election wrong. But to believe that the greatest speculative excess in the history of the world would not cause any damage? That's some serious denial.
And those three homebuilder stocks he recommended? Down 23%, 16%, and 26% in a month. Ouch.