Personal Wealth Management / Market Analysis
Fisher Investments' Founder Explains the Impact the Supreme Court Has on Markets
Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher explains how the Supreme Court makeup might impact capital markets. Ken reaffirms markets pre-price widely known information and only look 3 to 30 months into the future. As such, any changes to Court structure—which are often highly anticipated and seldom happen given each justice’s lifetime appointment—should not impact capital markets. Additionally, while many of the Court’s high-profile rulings may affect the country in the long term, most cases go without media coverage, take a long time to resolve and are not decided upon by a close vote—lacking the surprise power to move markets.
Title screen appears, “Fisher Investments' Founder Explains the Impact the Supreme Court Has on Markets”
A man appears on the screen wearing a navy suit, sitting in a office in front of a fireplace.
He begins to speak.
A banner identifies him as Ken Fisher, Executive Chairmen and Co-Chief Investment Officer, Fisher Investments.
Ken Fisher doing hand gestures time to time explaining.
Ken Fisher: Recently because of the headlines and news commentary about the Supreme Court vacancy and Senate hearings and all of the things that go with, there's been a slightly elevated concern about the degree to which Supreme Court makeup up might impact the capital market stock market. And I just want to say to you that there's a really important way to think about this. And it actually has nothing to do with the Supreme Court, but it applies, and then we can talk about the Supreme Court in a moment.
Ken Fisher: But the first part is markets really only price the future, they don't price the past, you know that. And the future that they price is some place typically other than the most extraordinary of circumstances, which the Supreme Court appointment is not, between about three months into the future and about 30 months into the future. The stock market doesn't worry about tomorrow or two weeks from now. It's thinking past that. In a real panic—a panic being big thing that surprises everybody, everywhere in a hurry—it gets down to below three months, but not much. It's priced maybe out a month, month-and-a-half then. And then it never really pays much attention to much more than about 30 months into the future. That's what it's pricing all the time, sometimes a little on the short end of that, sometimes a little on the long end of that. But three months to 30 months approximately.
Ken Fisher: Supreme Court appointment is an appointment for life. And the makeup of the Supreme Court doesn't shift very much very often. And the decisions of the Court are decided typically and announced, the big ones, once a year. And some of them can have impact that moves markets over that period, but we'll talk about that momentarily. The long-term makeup of the Supreme Court, because they are life appointees, could have an impact. Just think about what happens if you put complete terrible people, whatever that means, forgetting about the way we normally think about it, which is people tend to think either to the political left or the political right, and they focus on what they think is good versus what they think is bad. And they can't see that the opposite might also be partly true part of the time or much of the time or even more of the time than they're right. But if we just think about what happens if you made the nine members all terrible, terrible, terrible, terrible, that would have an impact over the next bit of time, and it would have a real-world impact over the long term. But the market doesn't pre price the very long term. It just doesn't. And if you believe it does, you're going to have trouble with the stock market because there's an awful lot of things that come up that are very long-term oriented, that people get very worked up about and they just don't have market power. The market pre-prices that interim period.
Ken Fisher: Now, additionally, let me just say, if you're on one side of the political spectrum, you don't like it right now that the Court has a leaning to the other side. And if you're on that other side, you'd like it that it has a leaning toward that side. And I want to say to you that that's much less important than people think it is, because most of the decisions that the Supreme Court ever makes are not made on a close vote. Many of them, more than not, are unanimous. Many of them are delegated. And yet it is also true that it is a very distinct minority that are decided on a close vote where the makeup of the Court is terribly important. Now, those tend to get a lot of headlines. They tend to be thought of as terribly important. And yet even there, few of them impact what capital markets care about, which is the future of business in the next three to 30 months.
Ken Fisher: And so therefore, when you think about this, it may be terribly important to the future of the country. It may be terribly important to non-capital markets things. It may have more economic import than capital markets import, stock market import, but it doesn't have much stock market import at all. So, I wouldn't get too worried about that.
Ken Fisher: Thank you very much for listening to me.
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A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.
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