Is anyone keeping track of all the changes happening? I try to list some that I found:
Repudiation of OECD tax deal. This would have brought profits into taxation. This could be a big win for highly profitable multi-nationals esp. Big Tech. A major boon to future earnings if the US pushes back on taxation
Push for energy infrastructure. Maybe benefits nuclear and gas generation as well as infrastructure build out. Solar and wind likely to suffer and/or stall. EV tax credits gone?
Tariffs. Under discussion, maybe just a negotiation tactic or maybe start of new Trade Wars. Maybe major volatility until resolved. Potential source of inflation.
Crypto. Let’s see if the strategic bitcoin reserve turns up. The final bagholder may be the US and provide a bid that lets everybody cash out. Friendlier regulations may also support.
Impact on USD. Jury is still out
Gold. Uncertainty is sustaining gold prices at highs.
How to position for this?
I was already positioned for gold and energy, but big tech is under-represented in my portfolio.
I think there is a short term and long term impact
Short term -: might be good for US stocks as it’d targeting to boost their earnings
Long term -: might make people wary of investing in US & change global trade relations because it seems the policies are only valid until the regime change. New government essentially backed out of all major agreements which were initiated / signed by previous one
It’s tough to estimate the long term impact easily. Not sure what to do maybe nothing
Something to keep in mind is that it was clearly signaled he’d want US taxes to go lower and have foreigners fund the US government (tariffs, but also see the recent threat of doubling withholding taxes)
Depends on the strategies time horizons and how quick the flip flopping is.
But if it does flip flop a lot, outside of staying cash, there is not much you can prepare for probably.
Maybe betting on the volatility itself, but there is not much outside of VIX related for stocks.
I’ve already tilted this way: accumulating gold, some commodities and real estate as well as making long term fixes on debt. More economically tied commodities (such as oil, copper etc.), I would like to get more into but would wait for an economic slowdown before investing there.
I have watched a couple of his interviews in English, he makes a convincing thesis but still don’t personally feel confident to do anything other than stack cash and wait.
How does/could/should one approach this situation (portfolio size 150-300k):
portfolio is small enough that cash contributions are still and will remain very meaningful for many years to come
portfolio is large enough that above 10% gain it makes more than one can reasonably/prudently contribute to themselves in any given year
Given that’s my situation I have decided to…do nothing.
With an asset allocation plan and cheap broker, you can easily allocate even small amounts to whatever, as long as it is securitized (e.g. ETF) and allows you to buy fractional shares.
So it sound to me more like you don’t believe in gold or real assets. Which is totally fine.
If you mean non-productive assets then you’re right. I understand a portfolio lacking any exposure to anything other than stocks and bonds is lopsided but I have an aversion to gold.
Waiting for a correction (aware of Peter Lynch’s statement about money lost waiting for rather than in corrections), if it doesn’t come when my stacked cash+emergency fund are 10% of my portfolio and 3 months’ expenses then I plan to add that money in crisis alpha securities like managed futures and fill up the 3A for the tax break. If a correction comes then I’d put all that’s saved (minus emergency funds) in my main ETFs of choice and 3A, and depending on the depth of the correction, something leveraged. I missed the correction of last summer due to lack of liquidity.
Ahem. “Silk underwear need capable asses” we say in Greece, meaning not everything is for everyone, all the time, and to want something needs you to be up to it. I mean we can’t debate the benefits of diversification, VT is diverse but not diversified, the unicorn portfolio will have several uncorrelated asset classes so when something goes down something else will rise and allow selling high to buy low.
In my opinion/understanding: this is important if you are consuming your portfolio OR if you are being evaluated on your assets management skills one way or another. If you are accumulating for yourself and have many years to go, what important is long term expected return. Do you know other assets that are expected to grow long term stronger than stocks?
In my view, times have changed over the weekend and I think it was time to prepare for Block Building (Borders and potentialy confiscation of foreign assets) and probably even a Shooting War either within the EU or among China and the States (non-nuclear).
Therefore, I am currently considering a heavy shift in asset LOCATION: meaning to reduce geographical layers between myself and my investments (Brokerage, Fund Domicile) and to Diversify Fund Locations. What does this mean:
Keep a decent share in CH Domiciled Products (reducing expposure to IE as Fund Location), even if there is a Tax Drag
Directly investing in some UK Based Funds that offer direct, UK based custody at the fund company (research ongoing)
Keeping IE based Funds in a Europe vased, Non-CH Brokerage
I further consider changing my asset ALLOCATION:
Increasing Gold Exposure and potentially holding some physical
Considering these moves were drastic. I will now wait for a month and re-consider then, before Instart to implement.
I guess it could go both ways. If Trump really mends fences with China and Russia and we go back to boom times, then Chinese and Russian stocks should get a big boost.
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