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Why billionaire Ken Fisher likes it when investors feel bad

Brian Sozzi

Keep on feeling bad John or Jane Doe day trader, there is one billionaire value investor who would be more than happy to pick up your shares on the cheap.

The feeling in the markets right now are bad with all the talk of Trump tariffs swirling around, surmises well-known investor and billionaire Ken Fisher. In his view, that represents a potential buying opportunity into a market nicely off its late April record highs.

“I like it when people feel bad because feelings are sentiment, which mean revert,” said Fisher on Yahoo Finance’s The First Trade. “The reality is that the game is reality versus perceptions. And when the perceptions are worse than the future reality markets rise. When the future reality is worse than the perception, markets fall.”

That said, it is hard to warm up to the notion that the coast is clear for investors at the moment. Sure, Federal Reserve Chairman Jerome Powell smashed the bears in the face with a nail-filled club on Tuesday with a new wink to markets that a rate cut is likely coming soon.

But underneath the hood lays a host of concerns for the companies that power the major stock indexes. Chief among them is the reality — using Fisher’s comments — that President Donald Trump’s dual trade wars with China and Mexico are starting to damage the U.S. economy.

In the past two weeks alone, data on U.S. manufacturing and durable goods have missed Wall Street estimates and slowed versus the spring. Today brought a meager 27,000 increase in employment in May, per a report from payroll processor firm ADP. Small businesses, with a ton to lose from the global trade war, slashed some 52,000 jobs in May.

Note that this report doesn’t include any impact yet of Trump’s new tariff attack on Mexico — that will probably appear in June.

“The slowdown seen in many non labor economic statistics finally showed up in a slower rate of hiring,” said Bleakley Advisory Group Chief Investment Officer Peter Bookvar.

All of that calls into question the health of the economy entering the summer. More fears could be stoked via the non-farm payrolls report due out on Friday. To add insult to injury, railroad operator Union Pacific — which hauled in $2.5 billion in sales from its Mexico operations alone in 2018 — said today its volumes are down 3% so far in the second quarter.

Not good.

Meanwhile, the market itself is technically on shaky ground. One dovish word shift from the Fed won’t repair that overnight, especially considering second quarter earnings could be ugly as companies slash guidance due to trade concerns. Despite the rally on Powell’s comments Tuesday, the S&P 500 barely closed above the key 2,800 level on so-so volume.

“It’s just that the issues we’ve been harping on over the past 4-5 weeks have not gone away… and most of them do not look like they’re going to fade any time soon. Therefore, we believe the current bounce (that we saw coming) will not last much longer than the mid-May bounce… and we’ll see lower-lows before this decline is over,” said Miller Tabak strategist Matt Maley.

But hey, bring on the pain... “I like it when the world focuses on the negative,” Fisher said. He is ready to play off your nervousness in an effort to realize big gains in the future.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi.

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