Fisher Investments' Founder, Ken Fisher, Discusses What Rising US Debt Means for Markets
Fisher Investments’ political commentary is intentionally non-partisan. We favor no politician nor any party, assessing developments solely for potential market impact. Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher explains why investors should not fret over growing US federal debt levels. Ken says some pundits talk about total (or gross) US debt levels to frighten investors. However, he believes it is better to focus on net US debt—currently about 70% of gross debt—and the affordability of this debt, rather than its dollar amount. Ken points out current interest payments to service US debt hover around 2.4% of US GDP—consistent with previous levels from the 1960s, 70s and early 80s. Ken admits this number could rise over time if interest rates remain high for a sustained period. For example, he observes how interest payments relative to US GDP increased to roughly 5% in the late 1980s and 90s before coming back down. Considering average maturity on US debt is about 6 years, Ken notes interest rates would need to stay high for several years before carrying costs of US debt worsen and potentially affect capital markets. He also believes forecasting long-term interest rates is nearly impossible and reminds investors to focus on a country’s ability to service its debt, not the absolute value of its debt. For more of Ken Fisher and Fisher Investments’ thoughts on the markets, visit us at https://www.fisherinvestments.com/en-us. Connect with Fisher Investments 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.
