By Rita Nazareth and Tom Keene – Aug 20, 2010 4:12 PM GMT
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Kenneth Fisher, founder, chairman and chief executive officer of Fisher Investments. Photographer: Jonathan Fickies/Bloomberg

Rising levels of investor pessimism are a reason to buy equities now, billionaire Kenneth Fisher said today.

The chief executive officer of Fisher Investments Inc. favors commodity producers after the Standard & Poor’s 500 Index dropped 5.1 percent over the last two weeks, according to an interview on Bloomberg Radio. An American Association of Individual Investors report showed yesterday that expectations U.S. equities will fall over the next six months rose 12.4 percentage points to a one-month high of 42.5 percent.

“I’m never going to be bearish when people are pessimistic,” Fisher, who oversees $35 billion from Woodside, California, said in an interview on “Bloomberg Surveillance” with Tom Keene. “My bias when pessimism is high is to own equities.”

A group of 32 raw-materials companies is one of two industries among 10 that have gained this week as the overall S&P 500 lost about 1 percent. The group rose 0.5 percent, helped by Melbourne-based BHP Billiton Ltd.’s bid $39 billion bid for Potash Corp. of Saskatchewan Inc.

Commodity Earnings

Profits for metals companies, chemical suppliers and seed- makers in the S&P 500 are forecast to rise 67 percent in 2010, the second-most of any industry behind banks, according to estimates from more than 2,000 analysts compiled by Bloomberg. Analysts predict profit growth of 26.4 percent next year, also the second highest rate for any industry.

“We’re still in this period where redeployment of capital at the business level is very strong, which means we’ll increase utilization of materials very heavily,” Fisher said.

The S&P 500 has declined this week as signs the economic rebound is stalling overshadowed better-than-estimated earnings growth. U.S. stocks fell today, with the S&P 500 heading for a second weekly decline, after a drop in commodities dragged energy and metal producers lower and as concerns continued that the economic rebound may be flagging.