The United States Debt Just Passed an Auspicious Milestone. Here's What Legendary Value Investor Howard Marks Says Investors Should Do About It.
2026-09-26 14:03
•Billy Duberstein •The Motley Fool
••••••••• • Axe Cap view
Howard Marks on U.S. Debt: What It Means for South African Investors
Rising U.S. debt and interest costs reinforce the need for diversified exposure, especially via companies with global reach and pricing power.
The U.S. national debt surpassing $40 trillion and interest expenses hitting $1.25 trillion in 2025 might sound alarming, but Howard Marks reminds investors not to panic. For South Africans, dollar weakness from debt and inflation risks means looking at companies earning income outside the U.S. is safer. This isn’t just about owning U.S. tech giants like Meta, which draws over 60% of its revenue internationally, but also considering how rand-sensitive companies might cope. Banks like Standard Bank and FirstRand benefit if the rand weakens against the dollar, cushioning local earnings. However, the rand remains vulnerable to global risk-off moves and domestic economic issues. Staying diversified with a tilt towards firms that can raise prices or have stable foreign earnings helps protect against currency-related erosion in value. The key is to avoid knee-jerk reactions like selling equities to pile into bonds, given rising U.S. rates and inflation. Markets will likely remain volatile as the debt hangover plays out, but strong fundamentals and geographic diversity steer portfolios through. this is just our opinion and not financial advice
Trim rand-only exposed names in favour of counters with significant foreign income like Naspers and Prosus, while watching banks that benefit from a weaker rand. Avoid overexposure to purely domestic consumer stocks for now.
- Naspers
- Standard Bank
- USD/ZAR
- U.S. inflation unexpectedly spikes, forcing sharp rate hikes
- Rand rally due to local political or policy improvements
6/10
U.S. national debt has surpassed $40 trillion with interest costs hitting $1.25 trillion in 2025. Howard Marks advises against panic-driven portfolio changes, recommending instead a diversified approach with focus on companies with pricing power and geographic revenue diversification. Rather than selling stocks or moving to bonds, investors should maintain long-term investment discipline while considering exposure to companies less vulnerable to currency debasement.
Our take is based on reporting first published by The Motley Fool.