Fisher Investments Reviews Political Drivers Entering 2025

Transcript

Ken Fisher:

So, throughout 2024, of course, a lot of questions about issues that related to US politics. And that's normal in an election year. Election's over. What do you think about, looking forward from here, where we are in terms of political drivers impacting stocks and capital markets?

Said simply, and I've said this so many times, when it comes to politics, and I'm going to speak in American terms-initially, not so much overseas non-American terms. The fact is, it's not about Democrat Party or Republican Party, good or bad. It's not about candidate A or B, good or bad. It's about rising and or falling uncertainty because capital markets dislike rising uncertainty and they love falling uncertainty; that's pretty much always been true.

So, as I've said before in videos, repeatedly-early in an election year, you tend to get a fair amount of rising uncertainty, as it isn't quite clear, for example, who the presidential nominees will be and how any of the rest of the election year will unfold. And during the primaries, aspirants typically put out a lot of polemic, a lot of extreme views, to try to attract core voters to them. And then that makes people think those things may be likely to happen. But these say this and those say the other, and that feels like rising uncertainty. And that's often scary early in the first half of the year.

But in the second half of the year, we get a presidential nominee, the presidential nominee picks a vice presidential nominee, party bills a platform, candidate versus candidate starts to take form, and you begin to see likelihoods of what the outcomes may be. Polling tends to show that all of that speaks toward falling uncertainty. The back half of election years have 9.5% average returns. Well, with, of course variance around that, year by year. Once you get to the election, that is a step in falling uncertainty that involves the election, but only a step, and a big one.

But after that, you begin to get the formation of a government, the completion of what the congressional elections will end up as. As I speak today, there's still about five congressional seats that haven't been finally determined. Those will all get determined. The president-elect picks cabinet members, but while the president-elect picks cabinet members, they got to go through all that confirmation process. And you know, as I sit here, one of those that president-elect Trump picked has already withdrawn.

President Trump put up a replacement pick to be confirmed through Senate. Senate confirmations have to go on, and then we hear a lot of ugly stuff. You get inauguration in January, and you get the so-called "First Day Effect". But legislation-the initial legislation-that will occur for the year, typically doesn't happen until later than that in this cycle. There's little in legislation that will happen until about March, when there'll be a big appropriations bill, and then you'll begin to see in that and other bills following what real legislation will look like before that, just executive order. So, all the things we hear about in media, that's speculation, that's uncertainty; but as we move into and through March, we get falling uncertainty. That whole process is bullish-falling uncertainty.

Then-so, that's the one part-the other part is what's going on as we look through the year in other elections and how they may play out. And I haven't got all that fully mapped out yet for 2025, which is part of what I have to do before we finish our forecast for 2025. But in the process of all that, you balance the falling uncertainty for the one that happens into the spring with whatever may be rising uncertainty in overseas elections in their own cycles. And those are the two that you play against each other to determine what the political trends are and how they impact.

Now, intuitively, you know that overseas elections about tiny little countries are not terribly important. It's really the big important countries that matter. But funny and strange things happen sometimes.

So with that, that's really about all that I can tell you. While the election is over, the process that the election normally has- which is falling uncertainty-is still continuing, and we want to see that continue as a bullish force, which probably continues into the spring. Thank you so much for listening to me. I hope you found this useful and educational, and at least halfway enjoyable.