Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses his current views on inflation. Ken says there are many differing opinions for the root cause of high inflation this year—such as rising energy prices associated with the tragic Ukraine war, supply chain disruption and stimulus following COVID-19 related lockdowns. However, Ken believes inflation is likely to decelerate moving forward, a potentially positive surprise that could help lift stocks.
He says indicators such as Treasury Inflation Protected Securities (TIPS) and long-term bond yields suggest inflation is likely to be somewhat transitory. He explains that relatively lower energy prices, easing supply chain disruptions and declining shipping rates and global commodity prices should help temper inflationary pressures.
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Fisher Investments Founder, Ken Fisher, Shares His Perspective on Inflation
Inflation has been a hot topic in recent months, with concerns around rising prices and the impact on everyday consumers and investors alike. As a renowned investment guru, Ken Fisher, founder and executive chairman of Fisher Investments, offers his perspective on the current inflationary environment.
Firstly, Fisher believes that the fear of inflation may be overblown. He argues that while there has been an increase in both headline and core inflation figures, it is important to look at the bigger picture. He points out that the current inflation rates are still relatively low by historical standards, and the recent uptick could simply be a temporary adjustment as the economy recovers from the pandemic-induced downturn.
Additionally, Fisher emphasizes that not all inflation is created equal. He distinguishes between demand-pull and cost-push inflation. Demand-pull inflation occurs when an increase in consumer demand outpaces the economy’s ability to supply goods and services. On the other hand, cost-push inflation happens when the cost of production, such as inputs or labor, increases and is passed on to consumers. Fisher argues that the current inflationary pressures are primarily driven by supply chain disruptions, which fall into the cost-push category. He believes this is a temporary phenomenon that will likely subside once supply chains stabilize.
Furthermore, Fisher advises investors to focus on the long term when considering inflation. He stresses that short-term fluctuations in prices should not dictate investment decisions. Instead, he suggests investors focus on the underlying fundamentals of businesses and industries before making any changes to their portfolios. Fisher encourages investors to consider investments that have historically performed well in inflationary periods, such as natural resources and commodities, real estate and infrastructure, and companies with strong pricing power.
Amidst concerns about inflation eroding purchasing power, Fisher promotes the importance of diversification. He suggests that investors allocate their portfolios across different asset classes to mitigate the potential impact of inflation. By spreading investments across various sectors and geographies, investors can effectively manage risk and capture opportunities that arise in different market conditions.
In conclusion, Ken Fisher offers a balanced and nuanced perspective on inflation. He cautions against knee-jerk reactions to short-term fluctuations and emphasizes the importance of a long-term investment strategy. While acknowledging the current inflationary pressures, Fisher believes they are transitory in nature and should not cause undue concern for investors. By keeping an eye on the bigger picture and staying diversified, investors can navigate the ever-changing investment landscape with confidence.
Yes, TIPS inflation breakevens are low. Happily, that creates an opportunity for investors. Real interest rates above inflation are about 1.4% for all maturities of TIPS, allowing investors to set up a ladder of TIPS to provide yearly income and protect purchasing power over inflation.
How come there’s never any word about the increase of minimum wage. I took a huge jump this year and I believe it supposed to have another huge jump next year you go from $7 to $11. That Hass to have some affect on inflation.
Inflation is entrenched the sooner the fed accepts that the faster we will get out of this mess
Has anyone actually thought to themselves that there's nothing Jerome Powell can actually do about inflation and that it is here to stay? Sure it will relax a little but prices for essential goods like food , the price for fuel at the pump and labor costs) which are 3 huge factors in driving inflation are not going back to what they were 3 years ago.
Energy prices and chemical input prices have driven an extreme portion of inflation. It all started during the Texas freeze in February 2021. Those drove major increases in everything, fertilizers, herbicides, pesticides, food, fuel, transportation, airfare, you name it, the root of it was an oil or chemical company. I work in the consumer chemical industry, I had a front row seat.
Corporate revenues and greed seem very satisfied with the level of inflation as consumers continue to spend
Thanks for the great videos as always. I most admire you and your father.
Very valuable insights. One of the challenges is knowing how long it takes the reduction of fuel costs, shipping costs to work through the system and show up in everyday cost of living
Ken, thanks for sharing your perspectives in a calm and Lear manner!
Sir, 10year-3month treasury yield ended up to get reversed. Do you think ‘the time’ has started..?
In the current case, a significant portion of the inflation is caused by supply chain disruptions. To reduce current inflation the government should be using tax incentives to compensate consumers for delaying their purchase of homes and other high priced items until next year and the following years, when the supply chains should be more stable, and our productive capacity will be restored. This would allow people to save more money, while demand is reduced, instead of the Fed taking away their money to reduce demand.
Is it accurate to declare energy prices are lower, when we are aware oil production is down and the price reduction is a product of selling reserve sources? That’s not a true price reduction but a temporary move, much like taking out a loan to pay for a vacation that’s above the budget. It may look like a good price for the vacation, (fuel) but in the long run it’ll end up costing more. Apparently you are seeing this from a different perspective. Would you explain?
Surely if demand decreases as the CBs induce recession rising interest rates at this pace. I am not sure the CBs timing is the best, by the way (late and overreacted?)
In the current case, a significant portion of the inflation is caused by supply chain disruptions. To reduce current inflation the government should be using tax incentives to compensate consumers for delaying their purchase of homes and other high priced items until next year and the following years, when the supply chains should be more stable, and our productive capacity will be restored. This would allow people to save more money, while demand is reduced, instead of the Fed taking away their money to reduce demand.
This guy is a wealth of information.He should have far more subscribers and views than what he gets.
Thanks for sharing ❤
The best!
another classic – Thanks KingFisher!
Inflation didn't come for good economic reasons, and it doesn't look like it will go away for good economic reasons. Energy suddenly roared back this year. Why? Because Europe is massively reliant. There's a long unpredictable winter ahead.
Love the videos Ken. What really concerns me is the comming resetting of the global monetary system and the introduction of CBDCs. The whole new system is laid out on the official website of the Bank of international settlements but the language is way over my head and i cant really understand what they are trying to do. Would love to see you do a video on the BIS’s plan to reform the system thats easier to understand.
Inflation is always a monetary phenomenon. The cure is supply expansion or monetary contraction. Currently only the latter is being pursued in the US. Hopefully the calvary is coming.
Ken, Your the best, but please get a new and different tie.
Did I mention “overhead supply”? There’s a TRIPLE-TON of that now built up in the THATCH roof we’ve created now, as well …! Isn’t there!
Excellent
Biden has emptied out our reserves to push oil down