Fisher Investments' Founder Explains What Interest Rate Hikes Mean for Stocks
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- Опубліковано 6 вер 2024
- Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher explains why interest rate hikes from the US Federal Reserve (Fed) should likely not be a cause of panic for stocks. Markets take all widely known information and incorporate that knowledge into stock prices. For interest rates, the stock market closely monitors central banks and their policies, so this information is rapidly pre-priced into stocks.
Ken says that slight rate hikes, historically, have not negatively affected stocks long-term because of this pre-pricing action. Essentially, Ken explains, by the time the rate increase happens, its power to surprise markets over the long run has evaporated. With all of the information available, Ken believes the interest rate increases are likely not a cause for concern.
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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. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.
would like to hear your view on inverted yield curve too!
Having read lots of books, magazines, newspapers in my distant past (1980s and 1990s), I heard and believed the mantra that I read that rising interest rates kill stocks. It kind of made sense since higher rates should deter businesses from taking on loans since it is higher interest rate debt. But as time went on, I did not see this phenomenon occurring and I did not recognize the disconnect. Since then I have done my own research and started reading financial books, listening to podcasts from all sorts, and so on and found that rising fed funds rates have not in most cases resulted in the stock markets decline. So I had to unlearn the repeated nonsense I had learned in my distant past. I have a hypothesis of why this is the case but that is another story.
I'm interested in your hypothesis
I belive that fear comes from the understanding of the DCF formula. As you increase the free rate the NPV reduces. You mentioned history but pass performance does not garantee the future. Thank you for sharing your wisdom. I enjoy all of them
And it’s priced too efficiently to trade off of
Thank you so much, Mr. Fisher! Your clarity is unique throughout all media.
I hear you Ken. If you watch the main street financial media. Every day the sky is falling . Nonsense . Keep up the great work. Thanks again, for the calm in the storm attitude. Appreciate you .
Still dealing with Covid lockdown hangover. Ken says it like it is. Thanks for clarifying so much.
Keep on Debunking and exposing the mythology! Thanks for the work you do and info you share. Valuable stuff.
It seems to me that the 0.5% hike hadn't been priced in before its actual implementation, even though it had been known beforehand that a hike was coming, so do you still think that widely known information is always priced in?
So powerful message. Thank you, Mr. Fisher! 🙏
IMO, Lower rates means more reckless spending. Just look at those companies who take out loans to prop up their stock prices with stock buybacks. Or companies who take out cheap loans and “diworsify” into businesses they have no business in. Or taking out loans to acquire companies that don’t fit their company culture.
I love the video. Thank you for explaining the way things really are and not the way they are perceived.
Another great ken Fisher video!
Thank you for this information
How did this play out??
So the fall in the market was the pre pricing of the rate hikes. I remember 2018 and the taper tantrum. Pre pricing means they adjust earlier. Seems like in 2018 that is what happened, and it just happened recently using your assumption. Am I wrong? So everything is great until it is not. And I cannot disagree with you on that.
As the economy opens back up, much money will be sucked out of the stock market as people will be spending instead of saving, causing stocks to drop
But… the money they spend will pump back into the market just as quickly, raising share prices back up..
It would be fantastic if Ken could do a UA-cam video on this and expound on possible ways to profit from it.
Statistically, Ken is right. Look up the data....Stocks get clipped with the 'lag' of rate hikes hammers stocks years into a rate tightening cycle.....
Where can I find more in depth content ?
Always thanks for your opinion 👍 from your korean fan
you are the best, thank you
First like first comment, what about raising rates into really tough base effects, gonna be hard to show positive growth eh?
Lovely
감사합니다. (= thank you)
Obviously, with higher interest rates, people might invest more in stocks instead of buying investment properties.
You the best
When a recession begins; that's when stocks get hit.... Let's hope the Fed learned the lessons of all post WW2 rate tightening cycles and DOES NOT OVER TIGHTEN AGAIN......Like Bernanke did and others....
👍
I come here for common sense information in a world that has lost all common sense, thanks
Goat!
The idea that higher rates don’t affect liquidity is non sense, ofcourse it does in the short term.
MARKET NEVER FORGET. FAIT ACCOMLI.
This video is not going to age well.
April Fools!