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.
Inflation is, as Milton Friedman said, “always and everywhere a monetary phenomenon.” So any time governments expand the supply of money (such as through massive “stimulus” spending), anxious investors worry that inflation will break into a gallop. But, as Ken points out, the amount of money is only part of the story.

Ken sees the velocity of money—a measure of how often the supply of money changes hands—as a force that is currently moderating inflation pressures. The velocity of money plunged in 2020, just as the supply was increasing. According to Ken, the result is that all that new money isn’t doing much “chasing.”

Ken also points to the market’s ability to pre-price all widely known information. He says that, by this point, the inflation story is so widespread in the media that the true inflation risk for investors won’t be the wild ride that most expect.

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[benitoproto]

I thank you Ken for taking time to help people understand that topic.

[patrickkgoodwin]

This idea was not in my finance course in college but Ken was explaining this in his articles in Forbes magazine for those on top help those who aspire see the trees from the forest.

[lesliefeigley]

Well Said. I've followed you since you recommended Texaco many moons ago. Been a pleasurable experience .I still own CVX. Thank you.

[lpgoog]

I’d take a daily dose of this guy over Wall Street Journal, Bloomberg etc. any day! I’d venture to bet he can make Buffett crack a smile 😊

[newsdd]

Great insight. So the inflations we worry will not be dramatically coming in 6months ~ 1year?

The price is already adjusted to the expectation of the inflations

Please anyone correct me if im wrong

[theoreticalFiZiX]

Thank you Ken! If I may add - in one of your articles in recent months, you mentioned that China is a leading indicator. Borrowing that idea, we can already see that the latest China inflation data, for Apr, appears to be decelerating from the Mar high. Whilst it's still too early to tell, the Shanghai market already "moved on" i.e. rallied, possibly on the back of reduced fears of monetary policy tightening on the back of this decelerating inflation print.

In any case, it will be useful to continue to monitor China's inflation data and market reaction.

[gurucastano]

What is better in general the country that prints the most money or the country that prints the least? If GDP and consumption is par.

I don't like where this is headed but I'll enjoy the ride. Thanks for your input