Personal Wealth Management / Expert Commentary

Ken Fisher Explains How President Biden’s Policies Can Influence Healthcare Stocks

In recent years, the prospect of major drug pricing reform in the US has weighed on pharmaceutical and Healthcare stocks.

According to Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher, these investor concerns are likely overblown because the government doesn’t have the ability to set broad drug prices for everyone across the US without congressional approval.

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A title screen reads “Ken Fisher Explores What President Biden’s Potential Tax Hikes Might Mean for Stocks”

Ken Fisher: I’d like to speak to you for a few minutes about a very, very common fear that I’m asked about often which is if the current administration is able to put through big tax hikes, perhaps through reconciliation with just 50 votes and the swing vote of the Vice President in the Senate and then also in the House where they actually need all of the Democrats except for two to pass anything at this moment as I speak, 218 to 212 as I speak with six vacancies.

Ken Fisher: The feature that’s, I think, important for you to think through is one that people never do. And I’m going to play this for you two ways: First we have a very, very, very long history of tax hikes and tax cuts of every important type at the federal level: personal income, capital gains, corporate, we have a very long history. And throughout the course of that history we have continuous stock prices. So whenever I see something like that where we have a continuous history and continuous stock prices, I say let's go back and look at the times where these things have happened before and look at the period six, 12, 18, 24 months afterwards and see what happened to stock prices.

Ken Fisher: And this is the part that people that have this fear don't really do and if they did I think they'd feel better about it because the aftermath of those tax hikes is fairly consistently positive. Not perfectly so, but actually more so believe it or not than the average positiveness of the stock market by about twenty percent. I don't mean twenty percent extra return I’ve been about twenty percent of the time more positive. And why? When the stock market's normally about two-thirds of positive, about two-thirds of the time, why?

Ken Fisher: And this is the part that people are baffled by because before that tax hikes ever done it has been debated, it has been discussed, it has been praised, and it has been cussed, and it is something that has been what stock markets and capital markets always do: pre-priced. If there's things to be feared they were feared in advance. A length of the process to go in public through legislation wandering around and debating and praising and degrading, all of that gets pre-priced into the market before the tax ever happens and therefore is keeping the market down a little before the bill. When the bill happens, it's over and done.

Ken Fisher: And so the history of the aftermath has been stronger because the debating process has been a little bit like a depressing spring that has been released when you move to the certainty of the aftermath. I want to reiterate: I understand why people who fear tax hikes fear them. I understand that aside from capital markets completely, it's entirely valid that this tax hike could hurt you, that tax hike could hurt your brother, the other tax hike could hurt your sister in the real world, in the business that they do, in their pocketbook etc. etc.

Ken Fisher: But in capital markets, stock markets, bond markets, currency markets, etc. etc. all of these things in that long process it takes to get legislation through Congress get pre-priced creating a dampening spring effect before the legislation is passed and signed and then a release of that spring after it's over and done.

Ken Fisher: Thank you very much for listening to this video, but this is a topic that you should not see as a negative impact because we have a long history we know exactly what happens whether it's personal income, capital gains, which is basically a different version of the same thing, corporate tax hikes, you can't name a tax hike that we haven't really seen something pretty similar to before that might possibly get through this Congress and come back to negatively hurt you or someone else or help you or someone else in any way you envision it that markets won't pre-price.

Thank you very much.

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“Investing in 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 Investments 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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