Ken Fisher on Short-Term Market Swings, Natural Disasters, US Debt and More – November 2025

Transcript:

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Naj Srinivas

Hello and welcome to the Fisher Investments Market Insights podcast, where we discuss our firm's latest thinking on global capital markets and current events.

I’m Naj Srinivas, Executive Vice President of Corporate Communications here at the firm. Today, we’ll hear from founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, Ken Fisher.

In this episode of Market Insights, Ken answers some common listener questions to help you better understand the world of finance and investing.

But before we dive in, I'd like to ask you a favor. Recommend our podcast and rate it wherever you listen. In just a few minutes, you can help make this valuable information available to even more people. Thanks so much for your help, in advance.

With that, let's dig in with this month’s Ken Fisher mailbag. Enjoy.

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Ken Fisher

Every month I get people sending me questions and I try to answer them briefly in what I call the mailbag, and my problem is that I always take too long answering them, but we'll give it a go here again.

So are short term swings always driven by sentiment? I don't like the word always, but I'd say pretty close. Their reality is that when you think of almost all capital markets as opposed to illiquid markets, for the most part, short term swings are driven by sentiment because sentiment is really a reflection of demand to own something. Prices being set by the interplay of supply and demand and supply changes almost always happens slowly. Demand changes, which are about emotion, like your emotion, can actually swing very quickly. So I wouldn't go as far as always. Sometimes you get sudden governmental intervention in some unexpected way or something else, but almost always it's nothing but sound.

With the increase in natural disasters, isn't that going to impact financials and be a boom for builders? Hey, I hate to tell you, I hate to tell you. The main financial that's impacted by, natural disasters is insurers. Now, the fact is they're really good at their business. And actually and this is a version of a casualty insurance. First, some natural disasters are covered by homeowners’ policies, sometimes. The same natural disaster may not be in a different state, in our country. All of this stuff is done differently by state because insurance law is based on state law, for the most part. And a lot of the natural disasters aren't covered by insurance at all. But that might be even worse. Oh my gosh, the person that's hurt gets no benefit out of it. Are natural disasters really more and worse than they used to be. How do you measure that? I don't believe there's actually any accuracy in the notion that there's an increase in natural disasters. Is it the frequency? Is it the magnitude? Do we have them? Yes, or you’ve just forgotten about the ones we had five, ten, or fifteen years ago? And my guess is it's the latter, because I don't actually know that there's a lot more natural disasters. Let me say natural disasters again come in a lot of different forms in the long term.

I mean, I remember very clearly when Mount Saint Helens, outside of Portland, Oregon, close to where I used to live in Camas, Washington exploded in volcanic eruption, causing all kinds of damage. How many eruptions have you seen lately? Then there's tidal waves. When was the last tidal wave you noticed? Then there's hurricanes and tornados. I live in North Texas, Dallas and we get tornados all the time, but most of them don't cause much damage and there's not really a difference in frequency. I think it's hard to put an aggregate number on this, and I just say there's no evidence that you can measure that natural disasters are particularly increasing, truly, or that they're impacting financials or the market as a whole or that it's a boom for builders because builders aren't doing all that well.

How does U.S debt compare to other governments around the world? So, it depends how you want to view it here. If you think about developed nations, America's a little on the high side of other developed nations as a percent of GDP, let's say, which isn't really an important metric. It's a little higher still compared to others on interest payment on the debt as a percent of GDP. That's a more important one. But these countries do not have terribly burdensome interest payments as a percentage of GDP.

This whole question kind of comes from one that, you know, I've been asked throughout my fifty plus year career, which basically stems down to don't we have too much debt? Isn't debt bad? Is it more of it going to make us have a big problem? And the answer to that is, so far, and I've written about this a lot in a lot of different places, and for a long time. We've never yet in America, and we are not now or in other developed nations in a place where the levels of debt are a serious problem. And let me tell you how you would know real simply. Not for sure that the debt was problematic, but that it might be as opposed to it will not be, in any short to intermediate time-period. How do you know that? Because if debt was a real burden compared to other nations, we'd see our long-term interest rates very high compared to the other countries. And for the most part, they've all been stable for a long time.

As a follow up to your recent column about demographics, can you speak to challenges, the younger generation faces today with home affordability and student debt? Isn't this a headwind to markets and the economy? Surprise! Actually, this number which grew for a long time in recent years, has been on decline and seems like nobody notices. That is, default numbers are down, total student debt numbers are down as a percent of income, as a percent of GDP, as a percent of pretty much anything you want to look at except for maybe your nephew's data. I don't know about that.

But the answer is, at this point, I'm not suggesting that younger generations don't have issues. Home affordability is different than the student debt thing. There's no question that home affordability is less. The price of homes has gone up. Let me point out on the student debt point also, that while the total dollars of debt are up. That's not the right way to measure it, because the right way to measure it is on inflation adjusted basis. And because of the vast amount of inflation that we had in the aftermath of 2021, as governments created way too much money in the hopes that that would help get through the Covid period. Once you adjust for that inflation, student debt is pretty good. But what that did do, is drive up initially home prices. And while home prices aren't going up at such a high rate now, they are less affordable for young people. And what I tell young people is, it has always been true that youth is a great time for difficulty. It always has been, difficulties change and what you do is you build your human capital. You make your craft, your job, your profession, your entrepreneurialism, whatever it is worth more by building your human capital. And you wait some years, and it tends to even out. That’s what I'd say.

I'm surprised you were bullish. All I see in the media is talking heads and newsletters that are doom and gloom. How is that possible? Well, I guess the question is, not how is it possible that they have the doom and gloom, but how is it possible that I'm bullish? Now to make this really clear, any reflection of negativity in capital markets is bullish. It's a real simple. I don't know how much actual true doom and gloom there is right now, but any expression of negativity is a statement that we aren't in euphoria. And as John Templeton famously said, “bull markets are born on pessimism, grow on skepticism, mature on optimism, and die of euphoria.” And just the amount that you can read about how people tell you it’s euphoric, tells you it isn't, because the statement that it’s euphoric and stocks can't do well is a statement about fear. It's not a statement about euphoria. So, the answer of how I'm bullish is yes, I can read, I can listen, I can see. And the same things you talk about that make you be concerned because all people are saying this stuff, not all people, but a lot, a lot, a lot of people says to me, that's fear in the marketplace and fear in the marketplace is always bullish.

Thank you for listening to me. I hope you found this useful and enjoyable. I look forward to be able to help you with this again next month. Take care, have a great month ahead.

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Naj Srinivas
That was Ken Fisher answering listener questions as part of his monthly mailbag. Thanks to Ken for sharing his insights with us.

If you want to learn more about the topics discussed today, you can visit the episode page of our website, Fisher Investments.com. You'll find a link to that in the show description. While you’re on our website, you can also subscribe to our weekly digest, which rounds up our latest commentary and delivers it right to your inbox every week. And if you have questions about investing or capital markets that we can cover in a future episode of Market Insights, email us at marketinsights@fi.com.

We'd love to hear from you, and we'll answer as many questions as we can in a future episode.

Until then, I'm Naj Srinivas. Thanks for tuning in.

Disclosure:
Investing in securities involves the risk of loss. Past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments and should not be regarded as personal investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. Copyright Fisher Investments.