Personal Wealth Management / Expert Commentary

Ken Fisher Provides His 2021 Inflation Forecast

Will rapidly rising prices throw stock investors from the saddle? COVID-related government spending has some investors concerned that surging inflation is just around the bend, believing too much money will soon be chasing too few goods. In his latest video, Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher explains why he believes current inflation fears are overstated.

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Title screen appears, “Ken Fisher Provides His 2021 Inflation Forecast.”

A man appears on the screen wearing A navy suit, sitting in his office.

He begins to speak.

A banner identifies him as Ken Fisher, Executive Chairmen and Co-Chief Investment Officer, Fisher Investments.

Ken Fisher does hand gestures time to time while talking.

Ken Fisher: Increasingly in recent months, there's been this concern do we have a wall of inflation ahead? Is inflation about to gallop and in that create other side effects like knocking stocks or impacting bond prices? Let me just say to you that, of course, there's always variables and there's always risks. But my sense is that this story is so widespread that to the extent there's an inflation risk ahead, it's much smaller than what people normally think.

Ken Fisher: Now, let me talk to you about why. First off, pricing is always competitive. Secondly, the fact is we all know a lot of things that we've seen. The fact that the quantity of money in America was grown hugely during COVID and also hugely, but less so overseas is one that everyone knows from that the velocity or turnover of money has fallen so that we haven't actually seen inflation. This is counter to what people would have thought or expected from the way these things were taught decades ago. But decades ago, they didn't have forms of money or near money that we commonly use today, ranging from trading via I'm not talking about securities trading.

Ken Fisher: I'm just talking about buying something off of paying for it via your mobile device or even 50 years ago with credit cards, which were very rare then. The fact is, we've always believed that if you increase the quantity of money, you get a comparable increase in inflation, less any increase that you have in GDP in real production of real goods and services.

Ken Fisher: This concept has never been tested against a huge increase in the quantity of money in modern times. And my sense is that you can tell that it's false by the fact that inflation pressures are much lower overseas than they are in America. But at the same time, it's true, and it's always been true far longer than you believe, far longer than anyone knows. I wrote about this in my 1987 book, the Wall Street Walls. Inflation is always and everywhere, also global.

Ken Fisher: And if one country prints too much money among developed nations relative to the others and you get that inflation effect, the one that does too much tends to export its inflation to the ones that haven't. And that's why I believe that overall inflation pressures ahead are less than people think they are because overseas, which is the biggest part of the global economy, it's been much less than here in America.

Ken Fisher: Finally, I just want to say that markets are really good, and you've heard this from me in so many other ways and so many other things at pre pricing this in advance. There's little that you or I or anyone else knows today about prices of things that isn't already reflected in the price of other things.

Ken Fisher: And so, we've already seen interest, long term interest rates rise in America and overseas more than I would have expected this year in fear of this inflation.

Ken Fisher: But that pricing impact is probably now overdone or fully done because people have had plenty of time. The story is widely distributed. If this is all the interest rate kick up that you can get out of this story, the amount of inflation that's ahead is this much, not this much So, that's my story and I'm sticking to it. And thank you for sticking with this video.

Ken Fisher finished talking, and a white screen appears with a title “Fisher investment” underneath it is the red YouTube subscribe Button.

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A series of disclosures appears on screen: “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 investment 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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