Billionaire Ken Fisher Calls Last 9 Months a "Midterm Miracle." Here's Where He Thinks the Stock Market Goes From Here

Ken Fisher knows a thing or two about investing. His father, Philip Fisher, wrote the classic book Common Stocks and Uncommon Profits. He has also written several investing bestsellers of his own. His Fisher Investments firm ranks as one of the largest money managers in the country. Fisher's current net worth stands at $7.2 billion, according to Forbes. 

So what is Fisher's opinion about the stock market these days? He recently spoke on a YouTube video in which he called the last nine months a "midterm miracle." Here's where Fisher thinks the stock market goes from here. 

Image source: Getty Images.

The magic of midterms

Importantly, Fisher didn't just recently identify the midterm miracle. He predicted one was on the way over a year ago. At the time, the S&P 500 was down close to 18%.  

Fisher wrote back then that the stock market tends to soar after the U.S. midterm elections. He noted that since 1925 (when reliable data was first available), the country had held 24 midterm elections. In the fourth quarter of those years, the stock market delivered positive returns 83% of the time. The numbers look even better for the first two quarters of the following years, with 88% positive returns.

This great trend has obviously continued. Since the midterm elections on Nov. 8, the S&P 500 has vaulted 18% higher and the Nasdaq Composite is nearly 32% higher. Fisher stated in his recent YouTube video that the market has been "picture perfect." 

What's next?

The obvious question for investors is: What happens after the midterm miracle? Fisher has some good news on that front, too.

He acknowledged that the second half of the year after the midterm miracle period often isn't as profitable as the preceding three quarters. However, he added that this is still usually a profitable period for the stock market.

Fisher observed that there hasn't been a negative year for the S&P 500 during the third year of a president's term since 1939. And in that year, the major index fell less than 1% as the U.S. faced the start of World War II.

Some people continue to be skeptical that a new bull market is beginning now. Fisher, however, thinks that's a positive sign. He argued that stocks are in a new bull market, but that the market has behaved "in ways a lot of people don't understand."

Should you buy Fisher's top five? 

Fisher believes that "the really high-quality growth stocks" should perform well in the coming months. In particular, he predicted that the big names that are "high-quality mega-tech" growth stocks will continue to lead the market. 

Unsurprisingly, Fisher Asset Management's portfolio prominently features such high-profile stocks. Its top five holdings are:

Data source: Fisher Asset Management 13F filing.

Are Fisher's top five stocks good picks right now? I think so -- especially if the billionaire investor is right about the stock market continuing to rise. Apple, Microsoft, Alphabet, and Amazon together make up close to 21% of the S&P 500. If these stocks don't perform well, it's unlikely that the index will.

The only outlier in Fisher's top five is the Vanguard Intermediate-Term Corporate Bond Index Fund ETF. I suspect that it will deliver positive returns as well. With the economic outlook improving, the Federal Reserve seems unlikely to raise interest rates much more, if at all. That should be favorable for the bond market. 

What if the bull market Fisher believes we're in evaporates? Long-term investors should still be fine buying Fisher's top stocks. Apple, Microsoft, Alphabet, and Amazon have great long-term growth prospects. And it's over the long term, rather than just during a nine-month period, where the stock market works its biggest miracles.