Wednesday, November 03, 2010

Exclusive Interview with Ken Fisher Part 2 - Elections, California's Future

Ken Fisher is a money manager, Forbes columnist, and on the list of the Forbes 400 Richest Americans. His latest book, Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street's Money-Killing Myths was just published. He is also author of several other books, including The Ten Roads to Riches: The Ways the Wealthy Got There (And How You Can Too!) and How to Smell a Rat: The Five Signs of Financial Fraud

Ken Fisher Interview Part 2
Please note: Interview took place on Wednesday, October 27, 2010

I'm going to get back to the bunks shortly but I read recently that you're moving your offices or some of your offices to the State of Washington?

We have 325 people in the state of Washington., and we started moving people into Washington three years ago. We're building a building in Washington because traditionally we like to own our own real estate and not to be in leased space. At this point in time, we now have about a third of our employees in Washington and we are not doing anything that I consider as very radical.

What this was leading to was, I was wondering what you think is the future of California, not from a political standpoint but a financial standpoint in the next couple years.

In the next couple years, California will largely continue on the trend that is has been on. Let's just think that through. Forgetting about other things, the driving feature in California for some period of time now, forgetting about budgets per se, has been to slightly lose population While shifting the demographic of the citizenry and the voter base, away from productives towards non-productives.

That becomes a momentum unto itself because the productives move out of the state of California and the non-productives into California, the non-productive become dependant, if you will, on the professional political class, which provides more support for more big government which requires more spending which requires more taxes and/or bigger deficits., either way, which again drives more productives away. Until you break that cycle, which is not easy to do, and if not done quickly, California continues down the same basic path.

So if you look at this year, which is on a national basis, is a year that is aiming towards more fiscal responsibility, supposedly, or more conservative people being elected, House of Representatives almost certainly going to Congress, governorships shifting heavily away from Democrats towards Republicans, California isn't going there at all. California is going to elect or in a sense you could say re-elect Jerry Brown governor. [Ed. note: Interview was Oct. 27] The legislature is going to remain heavily Democratic. The same dilemmas that Arnold Schwarzenegger faced as governor Jerry Brown is going to face as governor.

If you look for example at it from a different way and this is somewhat telling, if you look at the House races across the country that are thought of as toss-up races, the ones that could go either way, not a one of them is in California.

California isn't shifting so its basic problems will remain the same. Its socio-political world has continued to tilt away from productives a little bit each year toward more unproductives a little bit each year, which maintains and establishes the voting populace at a little more dependant on the professional political platform.

I think the fear from investors is, could the state go bankrupt, is that even a possibility, and if that did happen, then what?

You asked about the next few years. The state is not going to go bankrupt in the next few years. The state's going to have severe budget problems in the next few years. Might the state eventually go bankrupt? Yea, but not in the next few years.

I will make one point, that's an observation that so far does not seem to get the light of day. In November, I turn sixty, and in my lifetime, my adult lifetime, there has never been a November election in California that did not have multiple bond issue initiatives on the ballot. For the first time in my adult life, there are no bond issues on the California ballot and nobody seems to notice that. The San Francisco Comical hasn't written about it, the LA Slimes hasn't written about it. That's an interesting sign. It's a sign to me that California isn't going bankrupt anytime soon, but that's also a sign that's good that they can't sell any bond issues anyway.

End of Part 2

The Debunkery book is available at Amazon.

Ken Fisher obviously doesn't give individual stock recommendations in his interviews, but some stocks he likes that were mentioned in his recent Forbes columns are available in the form of a free Excel list at

Part 1 of this interview is available HERE.

By Fred Fuld at

Disclosure: Interviewer doesn't own any of the stocks mentioned in this interview series at the time the article was written.

Copyright 2010. All rights reserved. Reproduction of this interview prohibited without permission. All opinions are those of Ken Fisher, and do not represent the opinions of or the interviewer. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. If you want tax, legal, or investment advice, contact the appropriate professional.

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