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Nov. 10 (Bloomberg) -- The Standard & Poor’s 500 Index will probably exceed 1,300 as early as February because the economy continues to rebound from the worst recession since the 1930s, billionaire Kenneth Fisher said.
The benchmark index for U.S. stocks has surged 62 percent to 1,093.08 after sinking to a 12-year low in March. It will add up to 25 percent from last week’s close in the next three months, said Fisher, 58, who oversees $35 billion as chairman of Woodside, California-based Fisher Investments Inc.
“It’s just a reversal of excessive pessimism,” Fisher, ranked by Forbes magazine as the 289th-richest person in the U.S., said in an interview yesterday. “We still have a lot more bull market to go because we had such a huge bear market.”
Optimism the stock market will continue its surge helped drive the Chicago Board Options Exchange Volatility Index lower, keeping it below 50 since March. The VIX, as the measure is known, never exceeded that level before the credit crisis intensified after Lehman Brothers Holdings Inc. filed the biggest bankruptcy in September 2008. It has retreated 53 percent during the S&P 500’s eight-month rally.
The S&P 500 is recovering from a 57 percent plunge from a record high in October 2007 on signs the world’s largest economy is improving. U.S. gross domestic product grew at a 3.5 percent annual rate in the July-through-September period, exceeding the median economist estimate of 3.2 percent in a Bloomberg survey, after shrinking for four straight quarters.
‘Knocked the Socks Off’
“The economy is not recovering at a slow pace,” Fisher said. “America is faster than people think. Third-quarter GDP numbers knocked the socks off of expectations.”
Global investors and analysts agree that the world economy is on the mend. Almost 75 percent of respondents in a poll of investors and analysts who are Bloomberg subscribers in the U.S., Europe and Asia described the global economy as stable or improving at the end of last month, up from just over 60 percent in July.
Fisher proved too bullish two years ago. He told Bloomberg News at the end of March 2007 that he was “on the wildly optimistic side of things.” The S&P 500 then rose 10 percent in six months before peaking at an all-time high on Oct. 9. On Nov. 7, he said in an interview that stocks were still cheap given the level of interest rates. The equity index retreated 38 percent in 2008 for its worst performance since 1937.
His Fisher Global Total Return fund gained 4.9 percent annually during the five years ended Sept. 30, according to Chicago-based Morningstar Inc. That compares with the 5.1 percent annualized advance including dividends by the MSCI All- Country World Index, according to data compiled by Bloomberg.
The investor said yesterday that industries that are more sensitive to the economy should lead the market rally over the next three months. He cited raw-materials producers, consumer companies reliant on discretionary spending and industrial companies. Shares of technology companies and energy producers should also rise to a lesser extent, he said. Fisher also reiterated his view from an April 16 interview that investors should be “overweight” stocks in emerging markets