Ken Fisher Explains What Slower Economic Growth Means for Markets

Economies around the world have largely bounced back since COVID-related lockdowns curbed much of the world’s economic activity. But, are higher growth rates the real economic story for investors? In his latest video, Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher explains why he believes extrapolating current growth rates is overly optimistic.
Gross domestic product (GDP) is a measure of an economy’s output. Stock investors follow GDP because of the natural linkages between economic output and the business results that help drive stock prices. While some investors have been excited about GDP growth rates over the last 12 months, Ken Fisher recommends paying more attention to the level of the economy, rather than the growth rate.
Before COVID struck, Ken explains, the US economy was growing at a moderate, but sustainable pace. COVID-related lockdowns constricted the economy. However, without the typical economic excesses that would need to be worked out in a normal recession, the economy was able to rapidly jumpstart growth as lockdowns eased and activity normalized.
Ken explains economies are now returning to their pre-COVID levels. That implies that growth rates will similarly revert to their pre-COVID levels. “Growth rates will moderate,” Ken says, but that’s not a bad thing. US economic growth, for example, was solid and sustainable—just not the supercharged rates seen since mid-2020.
The trouble comes when investors extrapolate the rapid growth rates of the recovery into the future, assuming the economic cycle to be in its early stages. Ken believes that we’re actually still late-cycle, and that current growth rates are unsustainable in the long term.
According to Ken, investors should expect a world that’s more like it was pre-COVID than anything investors experienced since COVID—on both the downside and the upside.
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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.

[seanwaters]

I am looking at your podcast and note that it ws last updated May 2021. Is there any chance of added these youtube vids to your podcasts?

[newsdd]

Great insight. Most of medias talking big crash coming, while you are opposite to them with a great insight.
Like you said when everyone talking optimistic thats a euphoria where big crush is about to come.
I will always keep that in my mind . Respect from Korea

[iilililililiiill]

If we're at late cycle, it's time to be humble, await and moderate. Appreciate Sir. Fisher.

[Slowmodem]

I had my computer and youtube volume all the way up and had a hard time hearing what was said. Could you increase the volume in the future? Thanks!

[PatrickJordanRealtor]

So what would be a more normal growth rate? 10, 15%?

[kellyx]

Thank you. It is clear explained so that we know where we are in the economic cycle.

[thaddeus]

And that appears to be exactly what the bond market thinks. Rates continue to fall????

[lioreitan]

It all about priniting money no cycle or any other thing