Fisher Investments’ Ken Fisher Answers Your Questions On Inflation, The New Bull Market & More

Why Do You Wave Your Hands Around So Much?

Well, let me explain. You see, waving my hands around is just a part of who I am. It's my unique style of expressing myself. Some people might find it bothersome, but here's a tip: if the hand-waving distracts you, simply close your eyes and listen. My words are what really matter, not the hand gestures.

Do You Dye Your Hair?

Ah, the age-old question. How can someone my age still have a full head of hair? Well, here's the truth: I do have a few gray hairs if you look closely enough. But I got lucky in the genetic lottery when it comes to hair. My father had fantastic hair even in his 80s, with only one-third of it turning gray. So, I inherited those good hair genes. But hey, we're all different, right?

Where Can I Find Evidence of Zero Bank Lending Costs?

If you're curious about the near-zero bank lending costs in America, a quick online search for average savings account rates will do the trick. It's an easy way to verify the information. Banks and credit card companies are keeping lending rates low, regardless of the central bank's interest rate hikes. So, go ahead and do some research to satisfy your curiosity.

Section 2: Understanding Inflation and Lending

Will Inflation Continue as Long as Banks Keep Lending?

Well, the goal of central banks is not to stop inflation altogether. They aim to achieve a modest inflation rate of about two percent. Whether they succeed or not is another story. But here's what you need to understand: the rate of inflation will decrease over time, but it won't simply stop. It's a gradual process influenced by various factors, such as input costs in manufacturing sectors. So, don't expect prices to reverse and go back to where they used to be. Inflation will come down irregularly, not in a linear fashion.

The Role of Ongoing Lending in the Economy

Now, here's an interesting point. Ongoing lending actually helps prevent the economy from becoming too bad. In America, lending rates have been high, although they are currently moderating. However, on a global scale, lending rates are still positive but lower. When we consider net lending growth on top of inflation, the global figure is currently around three percent. So, while inflation may continue to fall, lending growth and its impact on the net lending rate are crucial to the overall economy. It's a complex global phenomenon that affects us all.

Section 3: The Bounce Effect and Rotating Sectors

The Bounce Effect in a Bull Market

In a new bull market, it's common to see a bounce in the categories of stocks that were hit the hardest during the bear market. This bounce effect typically lasts for around 8 to 13 months, gaining momentum as time goes on. The tech sector, for example, often experiences a significant rebound during this period. However, it's important to note that these categories may not continue to lead the market after the initial bounce. They might have already had their time in the spotlight and will be surpassed by other sectors.

Value-Oriented Sectors to Consider

So, when should you consider rotating to other value-oriented sectors and industries? Well, as the bull market progresses, luxury goods, energy, banks, and growth-oriented industrial sectors typically perform well. Luxury goods continue to thrive, energy can be a hit or miss, and banks benefit from rising market conditions. Industries with a growth-oriented focus, particularly those feeding into consumer durables, tend to outperform consumer staples. So, keep an eye on these sectors as the market evolves.

Section 4: Growth and Value Styles Can Coexist

Growth and Value Stocks in Harmony

Contrary to popular belief, growth-oriented and value-oriented sectors can perform well simultaneously. There's no rule stating that one category has to significantly outperform the other. They can have similar returns over a sustained period, without one overshadowing the other. This year, in particular, don't expect wildly different returns between growth and value. Both styles can hold their own in the market and provide investors with opportunities.

Thank you for joining me in this quirky Q&A session. If you enjoyed this, stay tuned for more grab bag questions and answers in the future. Take care and don't forget to subscribe to the Fisher Investment YouTube channel for more insightful content.