Ken Fisher Discusses Why Most Investors Misunderstand Quantitative Easing

Описание: Many investors fear that when the Federal Reserve begins tapering bond purchases—aka quantitative easing or QE—the stock market could be headed for trouble. However, Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher says these fears assume QE is a form of economic stimulus, which he says is exactly wrong.

Ken Fisher explains banks are in the business of taking in short-term deposits to finance long-term loans. The spread between those interest rates represents a rough estimate of banks’ profitability on new loans. The bigger that spread, the more incentive banks have to lend. Central bankers have long believed that buying long-term bonds to help lower long-term interest rates (often how QE works) incentivizes people to borrow more. While true, Ken says lowering long-term interest rates also reduces banks’ incentive to lend. When banks don’t lend as much, the effects are a disinflationary environment and muted money supply growth—not exactly economic stimulus.

Ken Fisher explains how the Fed’s plan to taper bond purchases allows long-term interest rates to rise naturally, increasing banks’ incentive to lend and reversing QE’s unintended consequences. That’s why Ken says tapering is actually bullish for investors and the stock market.
For more of our thoughts on the markets, visit us at https://www.fisherinvestments.com/en-....

You can also connect with us on:

Facebook -   / fisherinvestments  
Twitter -   / fisherinvest  
LinkedIn -   / fisher-investments  

You can also follow Ken Fisher here:

Facebook -   / kenfisher.fisherinvestments  
Twitter -   / kennethlfisher  
LinkedIn -   / ken-fisher  
Instagram -   / kenfisher_fisherinvestments  

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.