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