Fisher Investments Reviews Presidential Candidates’ Tax Proposals

Transcript

Ken Fisher:

One of the things that I say so often that I think can be annoying to viewers of my videos is: if everybody's afraid of this thing, or everybody talks about it a lot, then you don't have to worry about it. And that's a basic principle of markets. As I speak, we're coming up on Halloween. And then after that, not too long until Thanksgiving. And the fact is, Halloween is a time when you know you're all supposed to find goblins to be afraid of and Thanksgiving is a time to be thankful. The fact is, all the things that people worry about fall into buckets A or B. Either everybody worries about them and thinks about them and talks about them. You can see them all over newspapers and magazines. We hear about them on television. Or, not very many people do. Anything that puts into the bucket of all kind of people talk about it: You can hear about it on television, they'll talk about it on MSNBC, they'll talk about it on Fox News, it'll be in the Wall Street Journal, and you can converse about it at a cocktail party— if you go to such things—with almost anybody, include things like opinions about what happens on taxes. If Vice President Harris gets elected or former President Trump gets elected? And what happens if the Congress ends up looking like this? And what if these tax things that Harris talks about, or these tax things that Trump talks about get enacted, and what will that do to the stock market?

Remember, Halloween is coming up and right after that we got Thanksgiving coming up. And you should take all of those people that you know that worry about all those things, and you should thank them for worrying about it so you don't have to. Because them doing the worrying takes the risk out of all of them. Now, let me go specifically to the issue of potential tax cuts and hikes, of which there are a great many things that both Vice President Harris and former President Trump have talked about. Oh, gee, I find that so surprising in a presidential election year. Do you think that they've ever talked about tax cuts or hikes of any varied types in former presidential election years? I vaguely remember that they have.

Now let's think about that a little bit. Let's just think about that just a little bit. I say this so often, if you watch me on these videos that I just get annoying with it. Have we ever had tax cuts before? Different types? Have we ever had cuts before? Different types? What can we do if we go back through the very, very long history of US tax cuts and hikes, we can match them up against stock prices. We know when the tax cuts and hikes are first talked about. We know when the tax cuts and hikes of different types like capital gains, income tax, this, that and the other—probably could do it for dog license fees, but I never have. When these things are actually passed, and then when they become effective in the law, which is sometimes immediately and sometimes later into the future. And when you do that, this is the part that people just hate, because I say it over and over again. You can't see an indication that any of these, in any short- to intermediate-term time period that you can measure, move stocks.

Maybe in the long term they do? Maybe they have a long-term effect? There's a general tendency for people to believe that tax cuts are good for stocks. Tax hikes are bad for stocks. There's no actual evidence of that. We've had a lot of tax cuts and a lot of tax hikes. And you cannot see in periods like 1 in 3 years that there's any consistency there. Does that mean that if we have these kind of cuts or those kind of hikes under President Trump or President Harris, depending on which one wins, with a Congress that supports that, that it will not have an effect? I cannot say that it will not have an effect. I can say that there's been no consistency in all of the types of tax cuts and hikes before.

Now, I've covered this material fairly heavily before in several of my books, like The Only Three Questions That Count, and in that book, The Only Three Questions That Count, which is the most significant book, I think, that I ever wrote in terms of total cumulative sales from the beginning of time. One of the questions is, what do you believe that's actually false? And it is so common for people to believe that tax cuts or hikes do this to stocks or to the economy. And the fact of the matter is, maybe there's some of that in the economy. The economy is a harder thing to get good signals on. But with the stock market, we get good— we get pricing every single day—and we can do it for the US only, we can do it for the world, we can do it in foreign countries. And you cannot see the effect in a way that's measured and marked of any importance. So, if I were you at this point in time, I wouldn't focus on that too much.

Here's what I'm going to tell you will happen. Whatever those are, once we elect a president, once we have what we will know to be a Congress, then there'll be more chatter about what can actually pass versus today, where it's more wild and speculative. And as that happens, people will focus on those potentially real tax cuts and hikes. What I think will occur is that'll all get pre-priced slowly over time as the tax cut or hike or whatever it is that'll really happen moves closer and closer to potentially becoming realistic and realized. And then as it occurs, it will have already been pre-priced and you'll see no movement at all. Could that be wrong? Yes it could. Can it be that something else is happening at the same time that has a bigger effect than taxes? There's a very good likelihood of that.

But my point to you is I would remember we got Thanksgiving coming up. Thank all the people who worry about this stuff because you don't have to. They're doing it for you. It's a free service. Thank them. Thank them for freeing you of the need to worry because they're all doing it for you and that's all already in stock prices. Thank you much. I hope you found this educational and useful and somewhat enjoyable. Appreciate it. Thanks. Bye, next time.

Voice of Ken Fisher:

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