The Making of a Market Guru: Forbes Presents 25 Years of Ken Fisher

Chapter 8. 1991: Unbelievable Bull

"I am never absolutely sure about anything. Portfolio strategy is an odds game. You figure the most likely outcome, the odds, the penalty that may attach to being wrong, and act firmly but watchfully. My bullishness, while firm, is not unmovable."

—"A Contrarian's Mailbag," February 18, 1991

"Staying with this bull market, or any bull market, is sort of like hanging on to a horse when it's bucking; it keeps trying to toss you off. But hang on. Don't listen to the beaten-up bears who seize on every correction to trumpet the long-awaited end."

—"The Bucking Bull," November 25, 1991

Near the turn of the nineteenth century, Lord Nathan Rothschild offered this investing advice: "Buy to the roar of cannons, and sell to the sound of trumpets." In other words, buy stocks when war begins and sell when it ends. A few minor details aside (substitute laser-guided missiles for cannons, for example), Rothschild's old adage proved half correct in 1991. Tensions in the Middle East had been escalating rapidly since Iraq invaded Kuwait in August 1990. In early January 1991, chances of a peaceful resolution were fading fast, adding to investor anxiety. In the first nine trading days of 1991, the S&P 500 lost 5.3 percent.^[28]

Then, on Saturday, January 12, Congress authorized the use of military force in Iraq. True to Rothschild's advice, stocks didn't look back. The next week saw both the beginning of UN military action and the start of a two-month, 20 percent S&P 500 ...