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

Chapter 21. 2004: If

"There's no right way to make long-term market forecasts, as opposed to guesses. Those who say they 'know' where stocks will be in [ten years] are telling you more about what they don't know than what they do."

—"My WAG Model," April 12, 2004

"Ignore the long-term doomsters. The future is just beginning and will be awesome."

—"Philip A. Fisher, 1907–2004," April 26, 2004

Ken's bullishness continued in 2004. "My 2004 forecast is for a very positive year . . . with the Morgan Stanley World Index (in dollar terms) up 20%—less blessed than 2003 but rosy nonetheless. The S&P 500 should do about 20%, too." ("A Lucky Year," February 16, 2004.)

Stocks rose in 2004 as Ken expected, but not quite as much as he hoped. A market pullback began in early March. It was shallow, with the S&P 500 falling only about 7 percent.^[82] But it was long, extending well into August. Stocks finished the year strong, but not enough to reach Ken's 20 percent target. For the year, the Morgan Stanley World Index gained 15.2 percent, and the S&P 500 did a little worse, rising 10.9 percent.^[83]

Ken also forecast a strong bond market and steady interest rates in 2004. Using the same bell curve analysis he used for stocks, Ken saw most forecasters expected substantially higher interest rates in 2004. "This year's forecasters universally called for rising rates, on both long- and short-term bonds. I say the crowd is wrong and rates will be flat to down from where they are now." ("The Benign-Rate Scenario," ...