How You Should Navigate Political Uncertainty

Transcript

Ken Fisher:

So people will ask me pretty often if there's other periods as they contemplate fears of what's going on right now with things in politics as to other comparable periods in history. Now, let me just say, some of this is people on the ideological left being naturally hostile to everything about the Republican administration, Republican Congress, some of this is people that are on the right—a little like me, I'm a kind of a center-right person—being terribly concerned and upset about what the administration is doing with trade policy, not liking it, thinking it's wrong. I don't want to go into that, I'll do that in other videos, but it all creates a lot of political uncertainty.

First, political uncertainty is fear. Fear priced in the market is usually a precursor to an up move. Might make them go down first, but then precursor to an up move. When you think of this period, is it comparable to others? Well, you know, history repeats itself, but not exactly. Or the line was, you know, history doesn't repeat itself, but it rhymes. And there are so many periods where you can see things sort of like this. One of the ones that I pointed out on my X feed is how similar in 2025, the peak and down move in the market—or, for you looking at me, it should be peak and down move in the market—has looked like and paralleled the move that happened in the in the summer into the fall of 1998.

Now, if you think of the fall of 1998, you had, simultaneously, the Russian ruble crisis, the explosion of bankruptcy of a major hedge fund called Long Term Capital crisis, which was thought to potentially drive us into recession. And of course, which many of you may have now had long enough, or maybe you're younger and you don't actually ever lived through this. The experience of the period leading up to the filing in the House of Representatives in October 8th of 1998, of inquiry into President Clinton and the so-called Monica Lewinsky scandal that led and the testimony of the president that led to his December, I can't remember the exact date in December, actual impeachment. Impeachment in the House, of course, not— he wasn't thrown out by the Senate, just the same thing happened to President Trump.

So, in that, all those are going on all at the same time. I want you to think about this. This is the first time we've impeached a president in a heck of a long time. You can envision the political uncertainty about that. And a divided country between a Democratic president and a Republican Congress. Now, the market bottomed at the beginning of October after a 19% drop, almost a full 20% correction, the correction being defined as a drop in the broad market between more than 10%, but not quite as much or not as much as 20%. Something deeper than 20% categorized as a bear market.

So, you almost got a bear market out of that, kind of like we almost just did in 2025. Not quite as bad as 1998. Almost. And then, rallied from the beginning of October, all through October through November and through December, when the actual impeachment was declared on President Clinton to end the year up 26%. Something that in the beginning of October, almost no one could have envisioned. That's one. Another is 1974. The 73' - 74' bear market is one of the biggest since World War II.

It started leading into a major recession that, because inflation was very high at the time, no one was seeing as a recession—because gross sales numbers were going up. But gross sales numbers were only going up because of the inflation. Inflation-adjusted sales numbers had been starting to fall, but we didn't have as much kind of electronics and data then to be as on top of what was really going on as we kind of do now.

I was very young in the business then, I'd only been in the industry a couple of years. I'm watching this thing happen at the time and not really understanding it very well myself. But you can't make this stuff up. As we're, to be determined later, well into the recession. In the fall of 1994, Richard Nixon's Watergate things going, on that's creating the concept of a constitutional crisis. He resigns. Gerald Ford becomes president.

Now, this is not a negative comment about President Ford, but President Ford— toughest political race ever up to that point in time was winning the Republican primary in his Michigan House district, because it was a safe Republican district, and once he won the primary, he was going to get elected to that Congress. And then, from a nice—a very nice man, and then, when President Nixon chose to resign, he'd been picked to be vice president. He became president. But he didn't have any background or training or experience to really deal with everything, what's going on, and the inflation is going on.

Everybody's seeing the inflation, feeling the inflation, and he came up with a campaign and slogan to raise taxes, in the recession, under the moniker, whip Inflation now. And they actually created win buttons win "Whip Inflation Now", and they circulated the win buttons, and President Ford made a big deal about, you know, the win campaign—win "Whip Inflation Now"—which he was going to accomplish by raising taxes. Now, mind you create tariffs, that's a tax. Same thing.

So, there's a lot of these periods in history. But the lesson that you get from them is that they create the fear because those win buttons are happening within a month or two of the absolute bottom in the stock market before a major bull market that starts at the end of December of 74' and goes on for several years and reverses everything that happened in 73'-74'.

This happens pretty often. When I say this happens, this kind of political uncertainty and stupid stuff by the government happens, you know, six, seven times in my professional 50-plus year career. It's usually happening immediately precursor to a buying opportunity, which is what I think we are now, because I think everything President Trump has been doing with tariffs is wrong. But I think the fear of it is bigger than the actual damage that he will do. But I might be wrong about that. We'll see. Thank you for listening to me.

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