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.

If you would like to learn more of Ken Fisher’s and Fisher Investments’ thoughts on capital markets, visit us at https://www.fisherinvestments.com/en-us.

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