Ken Fisher on World Wars, Inflation, REITs and More – April 2026

Transcript:

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Naj Srinivas

Hello and welcome to the Fisher Investments Market Insights podcast, where we discuss our firm's latest thinking on global capital markets and current events.

I’m Naj Srinivas, Executive Vice President of Corporate Communications here at the firm. Today, we’ll hear from founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, Ken Fisher.

In this episode of Market Insights, Ken answers some common listener questions to help you better understand the world of finance and investing. 

But before we dive in, I'd like to ask you a favor. Recommend our podcast and rate it wherever you listen. In just a few minutes, you can help make this valuable information available to even more people. Thanks so much for your help, in advance.

With that, let's dig in with this month’s Ken Fisher mailbag. Enjoy.

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Ken Fisher

Every month people send me various kinds of questions and I try, but I'm unable to answer them briefly. But I call this the mailbag, and I print them up on a little cards so that my aged eyes can read them and try to whip you through them really fast because the people send me these questions, you might be interested in them too.

So that in a past video you mentioned that a world war will cause a recession because that has a negative effect on global trade. I was taught that World War II ended the Great Depression. Does a world war create a recession or does it end a recession? Well, first, I think we all know that a lot of us were taught things in school, that weren't exactly correct once upon a time. They would have taught you in school that the world was flat. And we all know that's not right. The fact of the matter is, there was a view when I was young, where a lot of people believed that World War II ended, the so-called Great Depression, but in reality, that's not true and that perception for a long time was just taught and that's what you must have heard and must have been taught or maybe you read a book or I don't really know, but no. War, destroying stuff does not end a recession. War creates dislocation in global trade while it's going on, which creates recession.

Now, let me just take a second. It is true that during war, countries get forced because of what will happen with combat to do a lot of activities that they otherwise wouldn't really want to do. Make a lot more bombs, make a lot more bullets, manufacture a lot more guns and all that stuff. And mind you, they're doing that for the purpose of the war. Likewise, at that point in time, a country is paying a lot of people to be soldiers, let's say in historic war, less so now for let's say the United States, that is not very soldier intensive in the combat in which we engage. But that portion of engaging in the activity heavily so that you can prevail in the war is a temporary activity. And when the war's over, that activity fades. The fact is that is often confused with growing GDP. It is not, because all those bombs and all those bullets all get used up and destroyed also. It's the dislocation and global trade of a world war where you can't comfortably put stuff on a ship and send it around the world for fear that it's gonna get blown to smithereens, more so now in a world that's ever more global in trade than 100 years ago, when the world was still more global trade than people think it was.

But if you just think about what's going on with the Strait of Hormuz right now, or I don't know, maybe that'll be over by the time you get this. Ships don't want to take the oil out because of the conflict. That's the dislocation. The dislocation causes recession. It is always true that world war with the Strait of Hormuz is not enough to cause recession by itself, because there's a lot of workarounds there. I've written a lot about that, and you can read my writing for the New York Post or otherwise, where I show that that's not as big as people like to make it out to be. That's not what I want to talk about here. The point being that the Strait of Hormuz is a micro example of what happens on a broader scale in a world war, or commerce on a global basis, gets decreased, because you can't put things on planes and ships and send them to the other side of the world without, for fear of them being destroyed in route. Thank you for listening to me.

What do you think will happen with inflation this year? Increase, decrease or stay about the same? I'd say stay about the same in the way to know that is what I talked about many, many times before. As long as central banks of the major nations and the big four blocks, US, Euro Bank, Bank of England, Bank of Japan keep growing money at the same approximate rate that it has been going at, the rate of inflation will stay about the same as it's been.

Do you believe, the role of bonds in portfolios is changing? Now, I'm going to say yes and no to that all at once. Let me take a second. This is one of those beauties in the eyes of the beholder thing. Some people think the role of bonds is this. Some other people think the role of bonds in a portfolio is that. I doubt that any of those people are really changing their minds very much about what the role of bonds in a portfolio is.

What is price weighted mean, and is that something investors should pay attention to? Price weighted is a way to create a stock index where stocks are ranked by their price per share, totaled up, that gives you a number, and then if there's any stock splits, they have a divisor that adjusts it so the index stays consistent over time with the before split after split. The problem with the price weighted index and there are two major ones of them that you know of in the world the Dow Jones industrials and then the Nikkei. The problem of the price weighted index is that stocks that have a higher price per share actually do have a bigger impact in their movements, than prices that have a lower price per share. And that of course has nothing to do with economic reality or the size of the market. So therefore, they can, for periods of years and maybe forever, be somewhat misleading. From the time that I was very young, I was taught to never pay attention seriously to the Dow Jones Industrial Index because it's a price weighted index, and instead you should always favor cap weighted indexes. There are other index constructions also that are interesting, but price weighted indexes really don't help you any. And price weighted indexes are an old, old, old construction because you could do them in the days before electronics with a hand-crank adding machine and a simple case of division and a pencil. So you could figure it out easily and that's why the Dow Jones Industrial and the other two Dow indexes became so globally accepted. But in today's world, other index constructions, principally market cap weighted index, are much better way to go.

What are your thoughts on REITs? Are they a sound investment option? Yes, they're a sound investment option. But the fact of the matter it's a stock. It's not real estate. So I don't think of it as real estate. It's a stock that acts a particular way. It acts a lot like cyclicals, like industrials, and heavy manufacturing of consumer durable products. It's got a lot of volatility to it. There's a place for it in the portfolio. It's not a huge weight. People often buy it in their mind as a replacement for real estate which it is not. It does not correlate with real estate and therefore you need to think of it as a stock. There's nothing wrong with it, but it doesn't quite act the way a lot of people try to treat it.

Thank you for listening to my answers. Some of them I could get off pretty quickly and some of them might keep you unable to. But thank you for listening to me. Send more questions. I'll try to answer them next month. Take care. Have a great month.

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Naj Srinivas
That was Ken Fisher answering listener questions as part of his monthly mailbag. Thanks to Ken for sharing his insights with us.

If you want to learn more about the topics discussed today, you can visit the episode page of our website, Fisher Investments.com. You'll find a link to that in the show description. While you’re on our website, you can also subscribe to our weekly digest, which rounds up our latest commentary and delivers it right to your inbox every week. And if you have questions about investing or capital markets that we can cover in a future episode of Market Insights, email us at marketinsights@fi.com.

We'd love to hear from you, and we'll answer as many questions as we can in a future episode.

Until then, I'm Naj Srinivas. Thanks for tuning in.

Disclosure:
Investing in securities involves the risk of loss. Past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments and should not be regarded as personal investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. Copyright Fisher Investments.