QuickTidal, on 11 March 2025 - 01:01 PM, said:
Trump thinks the United States is an island and that because it's powerful it can do whatever it wants, when in reality it is allowed to be powerful by many other slightly less powerful countries because it was perceived as stable and trustworthy.
The only reason the US is a superpower is because much of that power was willingly ceded to it .
That stability and trustworthiness flew out the window during that meeting with Zelenskyy, and especially when he started tariffing and threatening the sovereignty of places like Canada and Europe...
I have a feeling that the US dollar is going to cease being the global reserve currency (I assume replaced by the Euro) that it's been for many decades, and that Trump MAY very well default on the US Debt (which, I am not an economist, but I understand would be disastrous).
This man is sinking the USA in trade, economy, and on the world stage, and it's only been like two months...How you people aren't in the streets is beyond me.
The bond market is being overly optimistic about the Fed prioritizing the growth threat from tariffs over the inflation threat---contrary to what the Fed has been saying. Seems like it may be wishful thinking on the assumption that the threat of tariffs may persist, with the uncertainty stymying investment, but that the Trump administration couldn't possibly be stupid and reckless enough to keep extreme tariffs like the current ones in place for an extended period of time.
And a large percentage of US treasuries are held by other countries---which could retaliate by selling them.
If you invest in markets, I'd advise putting at least 5 to 10% of your holdings into CAOS in case of a market crash. I like CAOS because most of the time it provides positive returns---on average about the same as money market funds---as well as substantial crash protection (if the US stock market drops more than 25% in 60 days). Here's a good overview:
https://www.optimize...folio.com/caos/
While I have a visceral dislike for gold, despite its massive price increase last year (outperforming equities) it may also be good (at least until/unless better mining technology---or asteroid mining---causes the price to potentially plummet without government intervention)---I like IAUM for its comparatively low expense ratio and for holding physical gold in secure vaults.
Quote
Tariff war risks sinking world into new Great Depression, International Chamber of Commerce warns
"Our deep concern is that this could be the start of a downward spiral that puts us in 1930s trade-war territory," [...] High tariffs on foreign goods imported into the U.S. in that decade contributed to a damaging global recession. The downturn plunged nearly a third of the global workforce into unemployment and slashed production at heavyweight industrial economies Germany and the U.S. by half, according to research from the International Monetary Fund.
The likelihood of a similarly severe blow to the global economy is high[...] "Right now it's a coin-flip," [...] "It comes down to whether the U.S. administration is willing to rethink the utility of tariffs."'
https://finance.yaho...-090500002.html
More generally, instead of diversifying with bonds, it's historically been better to diversify through a mix of US and non-US stocks, as demonstrated in this high-quality study from 2023:
Quote
We challenge two tenets of lifecycle investing: (i) diversify across stocks and bonds and (ii) reduce equity allocations with age. An optimal lifetime allocation of 33% domestic stocks, 67% international stocks, 0% bonds, and 0% bills vastly outperforms age-based, stock-bond strategies in building wealth, supporting retirement consumption, preserving capital, and generating bequests. Our lifecycle model preserves crucial time-series and cross-sectional dependencies in asset returns and addresses small sample issues in US data.
There is no economically meaningful gain from holding bonds at any point during their lifetimes. The long-horizon return data suggest that diversifying with international stocks, rather than with bonds, improves investor outcomes for long-term appreciation and capital preservation.
[...] Households allocating 33% to domestic stocks and 67% to international stocks are much less likely to exhaust their savings. Under the common 4% rule for retirement spending, a couple using the balanced strategy has a 16.9% probability of running out of wealth. Target-date funds are even worse at 19.7%. In comparison, the probability for the optimal, all-equity strategy is low at 7.0%.
Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice
However, given headlines this morning like "European stocks are the hottest trade on Wall Street as investors turn away from US 'exceptionalism'",
"the [recent] the absolute dominance of international stocks compared to the U.S., [...] especially in countries like China, Germany, and Poland", and the recent survey of investment managers which found that a plurality think non-US stocks will be the top performing asset class (gold came in second, US stocks third), shifting funds from US stocks to ex-US stocks now is being a little late to the party, with much of that already priced in and European stocks now exceeding their historical valuation relative to US stocks.
This post has been edited by Azath Vitr (D'ivers: Yesterday, 02:54 PM