True, it’d mean the robust separation of powers which were part of the US’s success has eroded a lot, and economic policy cannot be trusted, which’d shake off a lot of the premium in the long term, and cause a nosedive in the short term. It’s not just economics, it’s the general erosion of the society and country when countries relapse to autocracy, Turkey is a victim, hopefully not for long though. Nobody lives forever.
Yes but…
funding costs for the US budget deficit are on the rise already, fueled by (1) trust in the US being actively undermined by arbitrary rulings, largely justified with BS arguments, on short notice (2) anticipation of less demand for US treasuries as the US trade deficit is reduced (fewer dollars seeking investment) - both the work of the current administration.
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I am not saying current admin is not causing issues. Of course they are.
But we should expect USD will go down in currency reserves share to 20% next month.
And I am saying it will get painful early on the way.
Hedging currencies is unfortunately expensive for Swiss investors because of the interest rate differential. The US FED rate is at like 4.3% while the SNB rate is at 0.25%. So holding CHF bears an opportunity cost of about 4% vs holding USD. This is reflected in futures and options pricing used for hedging.
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Just to be clear.
I think the evidence on hedging is inconclusive either ways.
So common wisdom is that if you hedge or not hedge and if you stick to it for long term, you will be fine. Minus costs
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Apparently the combo move of US10Y yield (now 4.5. %) rising & USD falling seems to indicate foreigners are moving their money out of US.
If this continues, this might create a bull run in other geographies simply due to supply demand
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As a still rookie in investing but with real skin in the game, these last weeks have been a godsend in emotional training and detachment, just glanced that the S&P500 did 1.8% yesterday, a number that’d get me excited 3-6 months ago, yet now it was “yawn”.
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This is nothing. Wait for a 40% drop and a continual grind down for over a year and then you can shed your rookie stripes.
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Yep, pays off that I spent a sizeable number of nights poring over the graphs from 2000 and 2008 to internalise that crashes don’t happen in a day, as many people think they do, but over months/years.
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Just to make you more chill, we need to grow 25% (CHF terms) to get back to ATH. Would need multiple such yawns 
Unless it’s a V shaped recovery. I guess we are set back couple of years.
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Oh yeah, fully aware, and believe it or not I don’t want a quick recovery, I want more accumulation.
Time will tell
What is more concerning is that in past we used to have few bear markets and longer bull markets
Now we have had 3 bear markets in 5 years. Makes me feel Equity risk premium might need to go up.
Makes one realize I should have worked more on my networking.
A few hours later, Trump announced a 90-day suspension of additional tariffs against dozens of countries, triggering a historic markets rebound and the best day for the S&P 500 index since the recovery from the 2008 financial crisis. Trump was seen later in the day, in a video circulated by the White House itself, boasting about his already rich associates making a killing on the surge.
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We had two formally-defined bear markets indeed, which in the grand scheme of bear markets they were blips, and are in the middle of something which has touched bear territory and could play out to be a protracted bear (2+ years) or not.
I think we need to consider the clear definition of a bear (-20% from ATH) with length of time it took to play out and resolve as more important than whether there was a bear market or not. The UBS Global Investment Returns Yearbook 2025 concludes that since 2000 global equity returns have been worse than those of the 20th century, with 3.5% real annualised return, so that’d support your inferred point that equity risk premium seems to have gone down.
It also points out (chapter 5 of the summary) that the deepest/longest bears were the 1929 crash (15.5 years for real recovery, I am assuming it means the principal), 70s oil crisis (10.3), dot com (7.5 years), GFC (5.3 years). I believe these are the sort of bears that grind people down, but they’re all shorter than that if one continues to invest and reinvest dividends. What’s also interesting is not the absolute time to real recovery, but that the recovery started anywhere from 1/3 to 1/2 of the the time from start of the crash to finish, bringing the time further down.
What can I say, I’m an optimist, as Churchill said “it doesn’t seem much use being anything else”.
Yeah that was blatant insider trading and they’re not even bothering to try to be quiet about it.
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It’s not so much the price action, but more the emotions. After the constant media barrage, there’s a point where everybody believes that things are not just terrible but they can only get worse this is usually just after capitulation where people who managed to hold on after 40% losses decide that they will get out with what little they have left.
There’s a saying that “it is darkest before dawn” and it is usually that peak pessimism which marks the bottom, but it can be a slow grind up too.
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That’s exactly what I tried hard to imagine when looking at the graphs: how would one feel under barrage of bad news, dead cat bounce after dead cat bounce for months at a time (“the best days happen in the depths of the worst bears”). Of course imagining vs being there is different. I’m confident I’d remain confident and optimistic, though.
Best is probably to turn off IBKR and not look at it for a while.
I think it comes down to understanding your risk tolerance. If you get it wrong, then you end up selling at -50%.
Which is why I say it is better to realise early that you can’t take it, and sell at a 10% loss instead of learning that you can’t take it a year down the line and end up selling at a 50% loss.
It will be challenging for those who have 100% stock portfolios, a 50% loss is much more difficult to hold through compared to a 25% loss with a 50/50 stock/bond portfolio.
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well (US) bonds are doing pretty badly at the moment too: https://testfol.io/analysis?s=hKfYqpUjmV9 (also still in drawdown from 2022: https://testfol.io/analysis?s=ap7V8G8z0tf) so I dunno, I feel 50/50 would be more painful at this point, knowing that I’d have given up expected return for this limited protection.
(Though I admit that is a personal judgment call)
A global CHF hedged bond fund is doing ok I would say.
And this should be the bulk of your bond exposure in a 50/50 in my opinion.
For example.
It‘s basically flat ytd (very slightly up). So not in a drawdown and lowering overall portfolio volatility a lot.
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