Personal Wealth Management / Market Analysis

Fisher Investments' Founder Explains What Slowing Economic Growth Means for Stocks

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher explains how stocks can continue to thrive amid slowing economic activity. Ken notes that many investors may be concerned about the trajectory of stocks amid the war in Ukraine, rising interest rates, Fed tightening and slowing economic growth. Ken reminds viewers of what truly moves stock prices: the difference between investors’ expectations and reality, specifically over the coming 3 to 30 months. If reality exceeds expectations (i.e., a positive surprise), stocks will likely do well. Conversely, if reality falls short of expectations (i.e., negative surprise), stocks may fall.

Given broadly poor expectations for near-term economic growth, even if the economy continues to slow, Ken reminds viewers that stocks don’t need perfection to move higher. Stocks can still rise so long as their direction exceeds expectations.



Title screen appears, “Fisher Investments' Founder Explains What Slowing Economic Growth Means for Stocks”




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: So, we have a lot of concern because of Ukraine war and rising interest rates and so-called Fed tightening and, and, and, and, and… that economy likely slowing, slowing economy. How can the stock market gang busters in a slowing economy? And I just want you to see this, step back from it for a second, because the one is really a misrepresented question.

Ken Fisher: What move stocks is whether things in the future, in the next approximate three to 30 months will be better, whatever that means, or worse, whatever that means, than what people had immediately previously been expecting. It's about expectations versus actual realities. So, if it's bad, whatever it is, but not as bad as people thought, market will go up. If it's bad and worse than people were expecting, market will go down if it's good to great, but not as good to great as people expected it'll go down. It's all about expectations versus reality.

Ken Fisher: So, once we get to a world like we have today where everyone's broadly expecting a slowing economy anyway, all you really need is the economy to do a little better than that while still slowing and you get the natural tendency to rise anyway. We have a very long history of the economy accelerating, slowing in a decelerating way, turning into actual negative GDP numbers for a quarter or two, or a long formal recession to worse. And in all of those environments within them, we have the economy moving and the stock market rising or falling. And we can see a very long history of the fact that it's about the prior expectations versus the future realities.

Ken Fisher: So, your question has to always be, is it going to be a little better or worse than what people think? Maybe a lot better or worse than people think? Because if it's going to be a lot worse than people think, well, then maybe you get a recession and bear market. If it's going to be a lot better than people think, then you're going to have a buoyant rousing bull market. And if it's a little better than people think when they think it's going to be bad and still going to be bad, but not quite as bad, you still get rising stocks.

Ken Fisher: That's the way this really works. It's not about absolutes, it's about relatives of expectations versus future realities. Thank you very much for listening to me.


Ken Fisher finished talking, and a white screen appears with a title “Fisher Investments” underneath it is the red YouTube subscribe button.


Ken Fisher: Subscribe to the Fisher Investments YouTube channel. If you like what you've seen, click the bell to be notified as soon as we publish new videos.


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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