I have been investing in growth stocks for over a decade (value investing before that). This is the first time I’ve changed my strategy significantly and I’d like to know what other fools are thinking.
Here are the macro trends I think are going to govern the markets in the coming years:
- increased market volatility caused by the erratic nature of the current executive
- increased inflation caused by trade wars
- reduced revenue growths in some sectors caused by decreased trust in US companies that provide critical infrastructure and services (defense, cybersecurity, internet services)
- possible increase in unemployment could counteract some of the inflation but also reduce demand for goods and services
I think the above effects are already happening. There are further possible but less likely risks:
- serious government disruption of US stock markets (i.e. Elon dismantling the SEC ) could cause a massive market crash
- DOGE and DoD gutting the US cybersecurity force could lead to massive attacks on all US digital infrastructure ( including payment systems, energy infrastructure and government functions)
- it’s possible that the executive will stop the madness and will return to the first term type of policies
Based on the above trends and risks I have reallocated my investments in the following way:
- 40% US stocks (down from 90%) that I own and think are least affected by the risks (WM, AXON, NEXT, IOT) - for the case that the situation stabilizes
- 10% international stocks (MELI, AZN, HLMA) to cover changing preferences away from US companies
- 5% puts on major US indexes because I do believe markets will fall further (this is up from 2% I had 3 weeks ago)
- 5% precious metals
- 4% commodities index swaps to cover inflation
- 2% volatility index swaps
- 34% cash (unsure what to do with it, waiting for the situation to evolve).
So essentially I’m going from investing in the future (growth) to betting on market downturn, inflation and misery.
What are your all’s strategies?