Why Ken Fisher Doesn't Try to Predict The Fed
Ken Fisher explains why he does not forecast Federal Reserve decisions, arguing that Fed officials are inherently unpredictable. He invokes a quote from longtime Fed Chair William McChesney Martin suggesting Fed leaders lose practical economic memory upon taking office. Fisher views the Fed critically, believing they make wrong moves more often than right ones.
Summary
In this short commentary, investor Ken Fisher addresses a question he has frequently received over his 50-plus year career: why does he not attempt to forecast Federal Reserve decisions, unlike many other market commentators?
Fisher anchors his reasoning in a quote from William McChesney Martin, the longest-serving Fed Chair, who reportedly said that upon becoming Fed Chair, one takes a metaphorical 'pill' that causes them to forget everything they ever knew about economics — and that the effect lasts for the duration of their tenure. Fisher finds this observation both memorable and instructive when thinking about the predictability of Fed leadership.
Fisher extends Martin's principle beyond just the Chair, arguing that the entire 12-member Federal Open Market Committee has effectively 'taken the pill.' He notes that the committee must vote and its members do not always agree, adding another layer of unpredictability to Fed outcomes.
Describing himself as a career-long critic of the Federal Reserve spanning over 50 years, Fisher states his belief that the Fed makes wrong decisions more often than right ones. Rather than trying to anticipate what type of wrong move they might make next, Fisher's approach is to observe what the Fed actually does and then assess how those actions will impact the world going forward — without wasting effort trying to predict their moves in advance.
Key Insights
- Fisher claims he has never had a history of forecasting Fed decisions across his 50-plus year career, deliberately avoiding a practice that most other market commentators engage in.
- Fisher cites William McChesney Martin, the longest-serving Fed Chair, who said that becoming Fed Chair involves taking a metaphorical pill that makes you forget everything you ever knew for the duration of your tenure.
- Fisher extends Martin's 'pill' principle to the entire 12-member Federal Open Market Committee, not just the Chair, arguing the whole body is subject to the same intellectual amnesia.
- Fisher describes himself as a largely career-long critic of the Fed, asserting that in his view the Fed makes wrong moves more often than right moves.
- Fisher's stated strategy is to watch what the Fed actually does and assess its forward impact on the world, rather than trying to predict their actions in advance, which he considers pointless given their inherent unpredictability.
Topics
Transcript
[0:00] So many people that have paid attention to my commentary over the decades know that I have absolutely no history of forecasting what said F said or for that matter other central banks of developed nations or the Euro zone do and they sometimes ask why is it you don't forecast what the Fed will do everyone else seems to. And the answer is well [0:31] the longest serving head of the Fed who I often quote William Mchesley Martin uh somewhat famously said that when you become the head of the Fed you take a little pill and it makes you forget everything you ever knew and it last just as long as you're head of the Fed.…
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