One Market Risk Ken Fisher Is Watching
Ken Fisher identifies a significant unpriced market risk: the absence of a classic bear market coupled with a business cycle recession for 17 years, which means necessary economic 'house cleaning' hasn't occurred. He argues that the biggest risks are often those we cannot anticipate, not the widely-discussed ones already priced into markets.
Summary
Ken Fisher addresses the challenge of identifying market risks that aren't already priced in by investors. He distinguishes between two categories of risks: those widely discussed (inflation, geopolitical conflicts) which are already reflected in market prices, and those not yet contemplated, which pose genuine danger.
Fisher's primary concern centers on the 17-year absence of a bear market coinciding with a classical business cycle recession. He explains that recessions traditionally serve a critical function: purging economic excesses and creating a foundation for the next expansion phase. While he acknowledges that some house cleaning occurred during the 2012-2014 European PIGS crisis, the 2020 Covid contraction, and the 2022 recession anticipation, none of these constituted the deep, comprehensive cleansing typically associated with a full business cycle downturn.
Fisher warns that when this eventual correction occurs—though not immediately—it will reveal problematic excesses that markets currently assume are benign. He uses Warren Buffett's metaphor about not knowing who's swimming naked until the tide goes out, emphasizing that hidden vulnerabilities will only become apparent during the next significant downturn.
Beyond this primary thesis, Fisher discusses low-probability, high-impact events (presidential assassinations, government errors, accidental nuclear incidents) that could occur but aren't currently on investors' radar. He concludes that risks residing in our collective blind spots—what we fail to contemplate—represent the true market dangers, unlike the widely-discussed risks that are already embedded in security valuations.
Key Insights
- Fisher argues that widely-discussed risks like inflation and geopolitical conflicts are already priced into markets because everybody talks about them, making them poor predictors of market movement
- The lack of a bear market paired with a business cycle recession for 17 years means necessary economic house cleaning hasn't occurred, leaving unresolved excesses that will eventually require purging
- Fisher identifies that partial house cleaning events (European PIGS crisis, Covid contraction, 2022 recession anticipation) are not equivalent to the deep cleansing that occurs during classic recessions paired with bear markets
- Fisher contends that the greatest market risks are those that cannot be contemplated or identified in advance, because if they could be thought of, other investors would already be pricing them into securities
- When the eventual bear market and business cycle recession finally occurs, markets will experience surprise and negativity as previously-assumed benign excesses are revealed and must be eliminated
Topics
Transcript
[0:05] Whenever I'm around our client base, I'm always asked, are there risks that I don't think the market's considering or pricing in? That's a pretty hard one to get. Let me give you my best thinking on that. First, there's everything that I can't think about. If I can't think about it because I try to, there's a good likelihood that other people aren't thinking about it too, whatever it is. And if it's big and bad, [0:37] that's a serious risk. Any big or bad thing that I can't think about, probably other people aren't thinking about— therefore, it's not priced. Now, let's step back from that for just a moment. All of the big bad risks that…
Full transcript available for MurmurCast members
Sign Up to AccessMore from Fisher Investments
3 Things You Need to Know This Week | Diplomatic Events, PMIs, Consumer Sentiment (Sept. 21, 2026)
This episode covers three major topics affecting markets: diplomatic meetings between world leaders that rarely produce immediate economic impact, September PMI data showing continued economic expansion across major developed economies, and declining US consumer sentiment that may create opportunities if reality exceeds low expectations.
This Week in Review | Fed Rate Hike, Tech Volatility & AI Risks, Bond Yields (Sept. 18, 2026)
This Week in Review covers three major market developments: the Federal Reserve's first rate hike since 2023 (25 basis points to 3.75-4%), tech sector volatility driven by AI safety concerns, and rising bond yields globally reaching levels unseen in decades. The hosts emphasize that these moves were largely expected, offer historical context for current yields, and remind investors to focus on broader fundamentals rather than short-term market swings.
Will Stocks Finish Strong in 2026?
Ken Fisher explains the 'Midterm Miracle' phenomenon, which shows that the fourth quarter of a president's second-term midterm election year and the subsequent two quarters historically represent the most consistently profitable nine-month period for stock markets. He expects strong market performance through the end of 2026 and into early 2027 based on this historical pattern.
Ken Fisher: Has This Bull Market Run Too Far, Too Fast?
Ken Fisher argues that the current bull market's 20% average return since October 2022 is not excessive relative to historical bull market performance. He contends that the concern about the market rising "too far, too fast" is a misguided perspective, since bull markets historically average 23% annual returns and this current market is performing in line with long-term bull market norms.
Ken Fisher on Market Crashes, US Debt, Construction and More
Ken Fisher addresses investor questions about market crashes, government debt, construction indicators, and risk management. He argues that there's insufficient evidence to determine whether crashes are less likely today, that debt-to-GDP ratios tell us nothing meaningful, and that construction trends are not particularly important economic indicators.