Ken Fisher Talks World Wars, Inflation, REITs and More
Ken Fisher addresses various financial questions, arguing that World War II didn't end the Great Depression but rather that wars create recessions through global trade disruption. He also discusses inflation expectations, bond roles, price-weighted indices, and REITs as investment vehicles.
Summary
In this mailbag-style video, Ken Fisher tackles several financial misconceptions and questions from viewers. He begins by challenging the widely taught belief that World War II ended the Great Depression, explaining that wars actually create recessions by disrupting global trade routes and making international commerce dangerous. He uses current examples like the Strait of Hormuz to illustrate how shipping disruptions cause economic problems, noting that while wartime activities like manufacturing weapons may temporarily boost GDP, this activity is unsustainable and the products are ultimately destroyed. On inflation, Fisher predicts it will remain stable as long as major central banks continue their current money supply growth rates. He addresses the evolving role of bonds in portfolios as subjective and dependent on individual investor perspectives. Fisher provides a technical explanation of price-weighted indices like the Dow Jones Industrial Average, criticizing them as misleading compared to market cap-weighted alternatives because they give disproportionate influence to higher-priced stocks regardless of company size. Finally, he discusses REITs as legitimate investment options but cautions that they should be viewed as stocks rather than real estate, noting they behave more like cyclical stocks and don't correlate with actual real estate performance.
Key Insights
- Fisher argues that wars create recessions through global trade disruption, not economic recovery, contradicting the common belief that World War II ended the Great Depression
- Fisher predicts inflation will stay about the same this year as long as major central banks maintain their current money supply growth rates
- Fisher explains that price-weighted indices like the Dow Jones give misleading market representation because higher-priced stocks have disproportionate influence regardless of company size
- Fisher characterizes REITs as stocks that behave like cyclicals rather than real estate, warning they don't correlate with actual real estate performance
- Fisher uses the Strait of Hormuz shipping disruptions as a micro example of how global trade dislocation during conflicts creates economic problems
Topics
Transcript
[0:00] War destroying stuff does not end a recession. War creates dislocation in global trade while it's going on, which creates recession. So, every month, people send me various kinds of questions and I try, but I'm largely unable, to answer them briefly. [0:31] But I call this "the mailbag," and I print them up on a little card so that my aged eyes can read them, and try to whip you through them really fast, because if people send me these questions, you might be interested in them, too. So, in a past video, you mentioned that a world war will cause a recession because it has a negative effect on global trade. I was taught that World War…
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