Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher answers viewer mailbag questions about retiree’s asset allocation, Federal Reserve policy and why the yield curve is different this time. Ken believes a retiree’s asset allocation should be determined by their individual financial circumstances and investment time horizon. According to Ken, investors with long time horizons should invest mostly in stocks. However, as one’s time horizon shortens—due to age or other circumstances—he believes reducing stock exposure to mitigate short-term volatility may be appropriate.
Next, Ken discusses the Federal Reserve’s impact on markets. Ken believes central bankers are mostly reactive to current economic conditions. Ken believes this reactivity leads to inconsistent messaging, which increases investor uncertainty and market volatility. However, Ken doesn’t expect Fed rate hikes to “kneecap” the economy since bank lending and credit creation remains healthy. Historically, a deeply inverted yield curve—notably, the difference between short and long rates—was a reliable sign of impending recession because it generally reduced bank profit margins and loan activity. However, Ken thinks the yield curve isn’t a useful proxy for bank’s willingness to lend currently—noting that bank lending has remained robust despite a rapid rise in short-term interest rates.
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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.
