xfdfw BLOOMBERG-TV-04

<Show: BLOOMBERG TV>

<Date: November 18, 2009>

<Time: 08:07:00>

<Tran: 111804cb.550>

<Type: SHOW>

<Head: Fisher Investments CEO Kenneth Fisher on Bloomberg Radio>

<Sect: News; Domestic>

<Byline: Tom Keene, Ken Prewitt>

<Guest: Kenneth Fisher>

<High: Fisher Investments CEO Kenneth Fisher on Bloomberg Radio talking about the stock market, investing and stocks >

<Spec: Children's toys, Autos, Bear Market, PIMCO >

FISHER INVESTMENTS CEO KENNETH FISHER ON BLOOMBERG RADIONOVEMBER 18, 2009

SPEAKERS: KENNETH FISHER, CEO, FISHER INVESTMENTS

TOM KEENE, HOST, BLOOMBERG SURVEILLANCE

KEN PREWITT, BLOOMBERG NEWS

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

08:07

TOM KEENE, HOST, BLOOMBERG SURVEILLANCE: Ken Fisher, Fisher Investments. The book is How to Smell a Rat. You remember the 1984 super- stocks which did very, very well. Early in his California morning. Ken, good morning.

KENNETH FISHER, CEO, FISHER INVESTMENTS: Good to be with you.

KEENE: Lots of different - good to have you here, lots to talk about, lots of names to talk about, but one jumped out; Hasbro. You've been writing up in Forbes.com, Hasbro. That surprised me; I thought the toy industry was flat on its back.

FISHER: Well, it has been which is one of the reasons the stocks are cheap, but if you think about the way I think about it, which is a myself being a grandparent, I know that I'd rather spend money on my grandkids than on my kids and secondarily, this last year caused people because of all the natural fears to scrimp on the grandkids, but grandparents aren't doing that and who has the money? Actually the baby boomers have the money and they're the emergent class of grandparents. So I think you've actually got a trend toward the toy business.

KEENE: I don't disagree with that based on my household, but really amazes me. Folks, there's very few charts that look like this. I mean it's gone from 5 to 30 relatively steadily over the last 20 years, hasn't it?

FISHER: The fact of the matter is I think this is a A, a baby boomer effect, but I also think forgetting the long-term and just thinking about the short-term at a time like this, this is a for a myriad set of reasons, a time you want to own consumer discretionaries and this an archetypal consumer discretionary because nobody really has to buy toys, but if you're going to buy toys, then you want to go toward classic brand names and Hasbro has this long steady list of them; Tonka Toys, Playskool, Nerf ball, Play Doh, you name them, G.I. Joe, etc, etc. on and on. And they will spend the money there. I believe that this is classic consumer discretionary at a time consumer discretionary should be strong. And one of the points that I've made for quite some time in my Forbes columns, and I've been a Forbes columnist now for 25 years and I've put a lot of time in trying to figure out how markets work in ways people don't appreciate, but categories that did well in the first half of a bear market but get crunched in the back half usually lead the first third to half of an x bull market and that's exactly consumer discretionaries. It's also materials, it's also industrials and it's also technology but in that regard I think the timing of consumer discretionaries is very good right now and Hasbro is just one of the number of consumer discretionary stocks I've been suggesting are good right now.

KEENE: And, Ken, I just put out on Twitter, 9.1 percent per year over the last 20 years for Hasbro, remarkable.

KEN PREWITT, BLOOMBERG NEWS: Well, Ken, I don't want to read too much into this one, but when you look at Hasbro and you ran down the line, G.I. Joe, Play Doh, Playskool, Tonka and you're talking about baby boomers; these are baby boomer toys that are still around, right? There's nothing electronic here?

FISHER: That's one of the reasons that I think they actually do well because when the baby boomers are picking for their kids, or for the grandkids, excuse me, they'll be wanting to buy the things that they themselves understand and relate too. The baby boomers are not the next generation people, they are the generation people and so the things they know, the things they're comfortable with; that's the things they'll want to share with their grandkids.

PREWITT: Let me ask you, Ken, to put on your market psychologist hat. We have a story today about who's benefiting from Ford Motor Company. I mean here's a stock that a year ago was at $1.00 a share, how many conversations did we have with friends and colleagues, man, Ford at a $1.00 a share, can you believe it? You really ought to buy some and just stick it in your back pocket. Why is that 99 investors out of 100 will say that's the thing to do, but hardly anybody will actually do it?

FISHER: Well, it's the same reason that the categories that I mentioned earlier that do okay in the first half of bear markets get killed in the back half, bounced so strongly because they get killed in the back half and as they get killed in the back half of a bear market, people move out of them to get into things that have been performing better and that makes them do even worse, which creates a depressed spring effect, but people don't like to step into that because most people in their bones in their heart are basically momentum players.

KEENE: Ken Fisher with us, folks, from Forbes magazine, as he mentioned over 20 years there. The new book, How to Smell a Rat; the Five Signs of Financial Fraud, and of course many of the different columns. You really intrigue me, Ken, with this Eric Nielson at Goldman Sachs really raved up the nation of Spain the other day, the Chief European Economist at Goldman and just raving about the infrastructure in investment that's been made in Spain. You rave up Repsol of Spain as being one of the great diversified companies of the world. Tell us about Repsol.

FISHER: Well, first off when we normally in America think about oil companies, we think about the oil companies that we know and have, but this is a huge oil producer, it's got over $2.25 billion of oil equivalent reserves. It's often criticized because a lot of its operations are in unstable parts of Latin America, which I think people misunderstand because Latin America actually today is one of the areas that's leading the world and actually has growing middle class and is consuming energy at an increasing rate. And so Repsol with a very diversified, it's Spanish based, but much of its operations are Latin America; it's almost like the quality of an emerging market stock. And that which is something that sells very, very cheaply has a big dividend, has a lot of the qualities of a growth stock, a lot of the qualities on emerging market stock and that Latin American part that frightens so many people actually is a positive not a negative because Latin America is one of the great emerging markets areas of the world.

KEENE: And, Ken, just in 45 seconds, we can come back. The Bloomberg has the actually Spanish shares trading under 3 times EBITDA. That is -

FISHER: No, no, the stock is very cheap. It's -

KEENE: That's remarkable.

FISHER: It sells at 40 percent of revenue, it sells at under book value. It's a very cheap stock and yet its growth stock, which put those two together it's hard to reconcile.

KEENE: Let's come back, here.

(BREAK)

KEENE: With us from California, Ken Fisher, you know him from Forbes magazine, Fisher Investments with any number of books out. Ken, the last time you were on with us besides getting a huge fan out of our technical director, Ken Felleu, this idea of how we think globally; give us perspective here. You - there's a nuance, there's a Fisher nuance to the way in this new new that Americans have to think globally.

FISHER: Well, first before we go there, in fact my next column is going to be on the fact that the new new is really the old old. The new new is, as you know, a concept that I think initially promoted by PIMCO and is now widely established -

KEENE: Right.

FISHER: That kind of says we've got bad times - not bad times ahead, but we're not going to have the umph we normally have. And the basic notion is that all the new insurmountable problems that we face, you know the laundry list, will keep us in some kind of dismal economy and poor stock market for a very long time. But the fact of the matter is that in my 37 years in this industry I have never, ever, ever seen an early new bull market where there wasn't some version of this thought that it's this new era. Last time around in 2003, '04 was the notion of a new era of lower expectations, but as a general rule the bigger and scarier bear markets have been, the bigger the floodgates have opened toward this sentiment which has always reminded me in my career of John Templeton's most famous line, of the four most dangerous words in the English language are It's different this time . It's always different, but it's never different and the fact of the matter is 20 years ago it was important to think globally first and about your own country second and if you think about America first this time, you miss the story of what's going on. The 23 percent of global GDP that is the United States is smaller, for example, than the 30 percent of global GDP that is the official MSCI categorized emerging markets, and yet they are growing rapidly. They have strong internal demand for the first time coming out of a recession. They're pulling us to make us stronger than we would be otherwise and people who think domestically miss what's going on globally because they keep looking for the world that I grew up in which was when America caught a cold, the world got pneumonia. Right now we're being pulled by the part of the world's GDP that's bigger than we are and we're having a hard time recognizing that and that's the necessary reason for thinking globally first, thinking domestically second or third.

KEENE: Ken Fisher, thank you so much for your time this morning. Hasbro call, Respol call and optimism on the global economy. Ken Fisher, of course the book How to Smell a Rat, the Five Signs of Financial Fraud.

08:23

END OF TRANSCRIPT

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