Personal Wealth Management / Economics

Fisher Investments' Founder Ken Fisher Shares His Thoughts on Central Bank Policies

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses the role central banks play in markets. Ken thinks investors vastly overrate the impact of central bank policies.

Ken believes investors incorrectly attributed the 2009-2020 bull market to the Fed and central bank policy. He also thinks worries surrounding central banks today are misguided, because central banks don’t have that power. He says central banks are reactors, not “causers”—and markets typically overwhelm what they do. For long-term investors, Ken believes ignoring central banks is likely the better approach.



Title screen appears, “Fisher Investments' Founder Ken Fisher Shares His Thoughts on Central Bank Policies”

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Ken Fisher: Been an awful lot of ink spilled recently over Federal Reserve and other central banks raising interest rates. And that causes people to ask me my thoughts on central bank policies.

I'd really much rather prefer to talk about something much more pleasant, and that would be almost anything. I have almost nothing good to say about central banks.

I think central banks could easily be replaced mechanically by an AI system that would be programmed to just simply grow the quantity of money as appropriately defined at a rate consistent with the growth of the economy and whatever social level of inflation is deemed to be acceptable. And otherwise stop doing all the rest of the nonsense that they do, because almost everything that they do, with good intent is, in my opinion stupid stuff.

Central bankers have never been very good. They're usually better before they become central bankers, and they're usually better after they leave the central bank. The longest serving head of the US Fed ever was William Chesney Martin from 1950s into 1968, who didn't do very well. Didn't do terribly, as heads of the Fed go, he did pretty well, actually. But people asked him why he did this and that, and the other was stupid.

And he said, well, when you become head of the Fed, you take a little pill and it makes you forget everything you ever knew, and it lasts just as long as you're head of the Fed.

He was succeeded by Arthur Burns in 1969—best prepared person ever up to that point in time to become head of the Fed. And he was a bloody disaster. And afterwards he was asked why you did all these things you said you'd never do. And he said, because I took Martin's pill. And the reality is, I think they all take Martin's pill.

And so, if I were you, I would

recognize the following features about central banks. They tend to be more reactors than causers. We tend to think they're causers.

There's so many people, in particularly the last decade, the

last 15 years, that don't get that the Fed is really a lot less, and central banks—big central banks—are a lot less powerful than people think they are. And they're much more reactive to what's going on than causal. That's a really hard one.

Throughout the course of the 2009 and 2020 bull markets, you heard people repeatedly say that it only was going on because of the Fed.

As I've articulated and written about and documented in lots of ways, that was always nonsense. At a time like this they say, oh it's all going to

be bad because of the Fed.

Central banks don't have that power.

They really don't. Markets overwhelm what they do. So, I really encourage you not to get too carried away with the phobia that is focusing on central banks. Actually, for most everyone, the more you ignore central banks, the better off your investing future will be. Because mostly what central banks do is stupid stuff.

A lot of you don't want to hear that. I do understand that. But I do think you're better if you come to think through how it is that central banks really are more reactors than causers, and in that regard aren't really able to do much.

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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