Does the U.S. National Debt Make the Stock Market Uber-Risky?

What's a rising stock market good for in the face of a $17 trillion national debt?

Feb 2, 2014 at 11:36AM

In this video from Tuesday's Where the Money Is as part of the Motley Fool's "Ask a Fool" series, Fool banking analysts Matt Koppenheffer and David Hanson take a question from a Fool reader, who asks, "If the U.S. has a debt of $17 trillion how can a rising stock market ever be anything more than shuffling the deck chairs on the Titanic?"

Matt discusses that although the national debt number can seem frighteningly high, putting it in the perspective of historically low interest rates at the moment, combined with a growing economy, makes the U.S.'s ability to service that debt look much more optimistic. As well, from a historical perspective, the nation has faced debt-to-GDP ratios that were as high or even higher than current levels, and was able to pay down those debt levels while still growing the GDP year over year at a healthy rate.

Matt and David also look at the stock market, and note that investors shouldn't be making their investing decisions based on broader macroeconomic trends. Stock prices are based on the strength of the individual businesses on the market and analysts' expectations of those businesses, and examining the business should be the best place to turn to make informed stock investment decisions.

However, for those investors who are looking to diversify geographically away from the U.S., Matt gives three American companies that make a large percentage of their revenue internationally, whose stocks might be worth a look.

One upcoming hidden driver of the U.S. economy?
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David Hanson owns shares of American International Group. Matt Koppenheffer owns shares of Aflac, American International Group, and Citigroup. The Motley Fool recommends Aflac and American International Group. The Motley Fool owns shares of American International Group and Citigroup and has the following options: long January 2016 $30 calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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