Personal Wealth Management / Expert Commentary

Ken Fisher Explores What President Biden’s Potential Tax Hikes Might Mean for Stocks

In this video, Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher addresses a very top-of-mind question for investors: What does it mean for stocks if the Biden administration is able to pass sweeping tax changes via reconciliation?

Transcript

0:02
i i'd like to speak to you
0:04
for a few minutes about a very very
0:06
common
0:07
fear that i'm asked about often which is
0:11
if the current administration is able to
0:14
put through
0:15
big tax hikes uh perhaps through
0:18
reconciliation
0:20
uh with just 50 votes and the
0:24
swing vote of the vice president
0:27
in the senate and then also in the house
0:29
where they actually need
0:31
all of the democrats except for two to
0:34
pass anything
0:36
at this moment as i speak uh 218 to 212
0:40
as i speak uh with uh
0:44
six vacancies the feature
0:47
that's uh i think important for you to
0:50
think
0:50
through is one that people never do
0:54
uh and i'm gonna play this for you two
0:57
ways
0:58
first we have a
1:01
very very very long history
1:04
of tax hikes and tax cuts
1:08
of every important type at the federal
1:11
level
1:12
personal income capital gains
1:15
corporate we have a very long history
1:19
and throughout the course of that
1:20
history
1:21
we have continuous stock prices so
1:23
whenever i see something like that where
1:25
we have a continuous history
1:27
and continuous stock prices
1:30
i say let's go back and look at the
1:33
times
1:34
where these things have happened before
1:35
and look at the period
1:39
6 12 18 24 months afterwards and see
1:43
what happened to stock prices and this
1:45
is the part that
1:46
people that have this fear uh don't
1:49
really
1:50
do and if they did i think they'd feel
1:52
better about it because the
1:54
aftermath of those tax hikes is fairly
1:56
consistently positive
1:58
not perfectly so but actually more so
2:01
believe it or not
2:02
than the average positiveness of the
2:04
stock market
2:06
by about twenty percent i don't mean
2:08
twenty percent extra return i've been
2:10
about twenty percent
2:11
of the time more positive and why
2:15
when the stock market's normally about
2:17
two-thirds of positive about two-thirds
2:19
of the time
2:20
why and this is the part that people are
2:23
baffled by
2:24
because before that tax hike's ever done
2:27
it has been
2:27
debated it has been discussed it has
2:30
been
2:31
praised and it has been cussed and it
2:34
is something that has been what stock
2:37
markets and capital markets always do
2:40
pre-priced if there's things to be
2:43
feared
2:44
they were feared in advance a length of
2:47
the process to go in public through
2:50
legislation wandering around and
2:52
debating and praising
2:54
and and degrading all of that gets
2:58
pre-priced
2:59
into the market before the tax ever
3:02
happens
3:03
and therefore is keeping the market down
3:06
a little
3:08
before the bill when the bill happens
3:10
it's over and done
3:12
and so the history of the aftermath has
3:14
been stronger
3:15
because the debating process has been a
3:17
little bit like a depressing spring that
3:19
has been released
3:21
when you move to the certainty of the
3:23
aftermath i want to reiterate
3:25
i understand why people who fear tax
3:27
hikes fear them
3:28
i understand that aside from capital
3:30
markets completely
3:32
it's entirely valid
3:35
that this tax hike could hurt you
3:39
that tax hike could hurt your brother
3:41
the other tax hike
3:43
could hurt your sister in the real world
3:46
in the business that they do in their
3:48
pocketbook etc etc
3:50
but in capital markets stock markets
3:52
bond markets currency markets etc etc
3:56
all of these things in that long process
4:00
it takes to get legislation
4:02
through congress get pre-priced creating
4:04
a dampening spring effect
4:06
before the legislation is passed and
4:08
signed
4:09
and then a release of that spring after
4:12
it's
4:13
over and done thank you very much for
4:15
listening to this video
4:16
but this is a topic that you should not
4:19
see as a negative
4:20
impact because we have a long history
4:23
we know exactly what happens whether
4:25
it's personal income
4:28
capital gains which is basically a
4:31
different
4:31
version of the same thing corporate tax
4:34
hikes
4:35
you can't name a tax hike that we
4:37
haven't really seen something pretty
4:39
similar to before
4:40
that might possibly get through this
4:42
congress and come back to
4:43
negatively hurt you or someone else or
4:45
help you or someone else
4:48
in any way you envision it that markets
4:50
won't pre-price
4:51
thank you very much subscribe to the
4:54
fisher investment youtube channel if you
4:56
like what you've seen
4:57
click the bell to be notified as soon as
4:59
we publish new videos
5:11
[Music]
5:19
you

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