Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher debunks the myth that good stock market returns require strong gross domestic product (GDP)—a measurement of a country’s economic output. Ken points out that when comparing historical GDP and stock return data, there isn’t a meaningful correlation. He also stresses that stocks lead the economy—which means waiting for economic data before making your investment decisions may be costly. For example, as bear markets conclude and new bull markets begin, economic recessions often occur while at the same time, stocks are on the rise.
Among other examples, Ken shares that in China—which has seen GDP growth over the past ten years–stocks haven’t emulated this same pattern. If GDP growth were a reliable predictor of stock market growth, Ken says we would have seen strong returns from Chinese stocks over this period.
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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.
