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President Donald Trump's recent significant US economic policy interventions surprised everyone. But don't panic and make any hasty changes to your portfolios. We want to remind you of the old World War Two adage: "Keep calm and carry on."
Those tranquil words, plus cups of strong black tea, carried us through the Second World War. It will doubtless shore us up in the next few months and years.
Flexibility will be the main game. To maintain a stable investment portfolio, we may have to adapt to new challenges, diversify, become better informed, grasp tax-efficient strategies, and conduct regular risk assessments. Grasshopper tactics are out, and a laser-like focus on long-term results is in.
The Global Economic Order Is Getting a Shake-up
There are a lot of frantic actions and talk about the directions a global trade war could take us. The global economic order is undergoing a momentous shift, but we are nowhere near the 'end of the world'. In fact, the drastic changes of these past few weeks could spur positive change in many countries that, until now, have lacked the political urgency to pursue much-needed economic reforms.
Keep Your Actions and Transactions Private
Discretion is essential. You must maintain confidentiality regarding your actions and financial transactions, particularly when researching investment opportunities abroad. Use a VPN (virtual private network) to encrypt your internet connection.
It will provide you with an anonymous UK IP address. It helps prevent hackers and foreign governments from intercepting your online activities. Additionally, a VPN can let you connect to servers in other countries to get a local IP address. The local IP address gives you an advantage in gathering information and understanding the full context of your research.
Buy the Dip (Cautiously)
Focus on the high-quality stocks of proven industry leaders. Market leaders pursue unique, sustainable competitive advantages. They stick to the strategies that have helped them to mature and outperform competitors. Most of these stalwarts operate globally and have strong balance sheets. They are generally more resilient during economic downturns.
Reconsider impulses to splurge in sectors such as industrials, consumer staples, and materials. Even reliable sectors like energy are volatile because new tariff levies may impact them.
"It's a good time to do your homework in the sectors that benefit from long-term trends. For example, look at the technologies that make the digital economy possible. Computing resources, e.g. microchips and semiconductors, are indispensable. They should rise to accommodate growth in the artificial intelligence (AI) sector.
Widen Scrutiny of Other Stock Markets
The tumultuous events arising from US President Donald Trump's Liberation Day have caused investors to reconsider their plans. Some are seeking options in markets beyond the US.
Japan is addressing wage stagnation and enhancing household purchasing power. A revival of Japan's technical industry and overdue governance reforms make Japan an appealing market for long-term investors.
Since the US president has sided with Russia over its invasion of Ukraine, he has also defected from the decades-old transatlantic alliance. As a result, investments in Europe's defence industry have become very attractive. European nations must increase their defence spending significantly. It should spur many new investment opportunities.
Additionally, Trump's tariffs have browbeaten European policymakers into accelerating long-overdue policy and trade reforms. For example, Germany has a long history of resistance to public debt. However, they have been galvanised into investing hundreds of billions of euros in defence and infrastructure.
But most eyes are drawn toward China. The government is keen to boost the private sector, support entrepreneurship and develop the vast local Chinese market as it enters Trump's trade war. China is also strengthening its relations with neighbours, including Japan and India. Many investors see China as the Dark Horse that could deliver surprising results in the near future.
Take Refuge in Money-Market Funds and Short-Duration Bonds
Money-market funds and short-duration bonds generate steady yields. It's known as a safe haven in times of great turmoil. Explore liquidity funds and capital-preserving portfolios that are diversified across product types and issuers and consist of a mix of deposits, money market funds, and bonds.
Managing Investments Is a Process, Not a Quick Task
Remind yourself that stock markets don't always rise in a straight line. There are no guarantees of success, and changes and even volatility are inevitable. Keep your eyes fixed on the long-term perspective for the win.