Personal Wealth Management / Expert Commentary

Ken Fisher Explains What Slower Economic Growth Means for Markets

Economies around the world have largely bounced back since COVID-related lockdowns curbed much of the world’s economic activity. But, are higher growth rates the real economic story for investors?

Transcript

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so a lot of people
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are excited about growth rates right now
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the growth rate over the last 12 months
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has been
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high it increases people's optimism
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but right now it's actually a little
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more important to focus on the level
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of the economy than it is the growth
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rates and let me try to explain why
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before covet struck we were growing
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in america and around the world some
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places more some places less
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but at a moderate but okay pace
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we didn't have excesses that are
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problematic
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uh and we had a
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seemingly good solid base and then
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covered struck and the short aftermath
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of that was the lockdowns that we all
0:54
know about that constricted
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the economy i like to refer to it as a
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constriction rather than a recession
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because it didn't have
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any of the normal attributes that a
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recession has which means
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former excesses in the economic system
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somehow some way that had to be purged
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in a downturn before you could resume
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growth
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and then when the lockdowns started to
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get lifted and even before
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the growth started to pick back up and
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some part the thing just shut down
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too much out of fear that there wouldn't
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be a rebound a lot of steel capacity
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lumber capacity oil capacity to shut
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down too much
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it took longer to pull back up we still
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haven't had
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enough capacity in some of those areas
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because it takes longer to open the
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capacity up than to shut it down
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but we've now gotten to a point where
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our economy is back to the levels that
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it was pre-covered
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now what does that imply when you stop
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and think about it
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it implies that we revert to that lower
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growth rate
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and that we don't extrapolate from
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recent growth rates thinking into the
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future that were
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early cycle in fact we're not early
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cycle were late
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cycle because while there was some
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improvements that businesses naturally
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made during that constriction
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the v-shaped recovery didn't provide
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enough time
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for a lot of that the way it would in a
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long
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protracted bear market and recession
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and instead the whole period as i've
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said many times before in other videos
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and in other writings in
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all the places that i write was
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more like a hugely oversized
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typical correction than a traditional
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recession
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and hence in that coming back at these
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levels
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that are the levels we were at before
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covered
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we're now to the level where the growth
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rate resumes back to that slower rate
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that it
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existed at before and
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that natural tendency to feel the
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exuberance
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of extrapolating from the recent past
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into the future
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is excessively optimistic growth rates
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will moderate
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as growth rates that's not bad it's
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just not to have the euphoria about that
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would expect
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huge growth rates so with that
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you should expect a world and all the
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things that go with it
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that are in their inherent nature
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more like it was pre-covered than
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anything
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you've seen experienced or felt since
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coveted
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on the downside or on the upside you're
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back to the future is back to the past
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and we're now back to a point where the
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growth rates
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and the future growth begin to look more
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like what we were experiencing
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in that precopite period thanks for
3:55
listening to me
3:57
subscribe to the fisher investment
3:59
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[Music]
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you

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