Trump, Tariffs and Turmoil / New Opportunities
08 March 2025
To all financial friends
As I write it is just one month to the day (20/02/25) when Donald Trump took office as the President of the United States for the second time. In every speech he creates upset, uncertainty and turmoil. Please find information and guidance enabling you to make informed decisions. Always remember that as a subscribing financial friend you are able to choose to talk 1-2-1 with the author of these words with your questions, queries and thoughts before you act.
Book a time to talk here www.calendly.com/yourfinancialfriend
A Little More Education. Knowledge, the Best Investment You Can Make!
Prior to Trumps interventions, my inner sense of market awareness has been informed sufficiently to suggest a greater need to be specific about the assets to hold. To reduce risk, financial friends hold pooled funds like Unit Trusts and OEICs. This allows your investment to be spread across a basket of shares in equity funds. In the one fund your fund manager may be holding as many as 120 different shares in his/her fund. If some share holdings fall in value others will rise to provide an acceptable return - this is the idea of course.
In the fixed interest market, where your manager lends your money to governments or the business/corporate world, the same principle works. Your fund manager may be holding as many as 80 or more loan deals in the one fund. The spreading of your holdings across many deals provides a lessening of risk compared with you holding a few individual shares or bonds.
So much unfolded in the news as Donald Trump announced tariffs, taking over Greenland making Canada one of the States of the USA, withdrawing support from Ukraine, etc. etc. etc. that I had to stop, breathe and reflect. I continue writing 07/03/25).
Let's Discuss
You will have heard me suggest that the world is upside down and that the world of money is upside down as well. Traditional ideas that investment must be for the long term, prudent and 'sensible' may not seem so correct today. Evidence shows a number of assets returning well above 30% in just one year. Now we hear of the 'new world order' with the 'USA making America great again' and leaving Europe and Ukraine without the financial and defence backing that has always been there.
The arising 'new world order' has a coalition of nations including China, Russia, Iran and North Korea perceived to challenge western values. Does this mean a shift in the global balance of power? Authorities warn us of growing war threat within the next five years. Europe and UK releasing huge funds to increase defence expenditure. How does the uncertain state of our world affect where our money and investments might be placed to meet the rising cost of living, protect and provide for our life and well being?
The Same Old Story?
Yes and no. Whatever happens there is always money to be made in the stockmarket. Supply, demand, and where the money goes next, secures profitable opportunities in the best and the worst of times. Long term investors may be content to ride the roller coaster of volatile markets not caring if their funds fall, as they will always return to profit in the longer term. This assumes that history over many years repeats itself. Will it?
For many students, their funds need to grow but they favour what might be perceived to be appropriate holdings to profit from, yet seek to protect against, current economic challenges. Here then, students consider Index (inflation) linked government bonds, high yield corporate bonds, funds holding defence stocks, consumer staple holdings, infrastructure sector funds, with gold and precious metal funds in view also.
Two Steps Ahead?
In the Money Awareness Course we talk of being two steps ahead of the market. You will recall that recent commentaries here discussed the likelihood of defence stocks rising. One of our newest students highlighted a fund that seeks to replicate a global defence industry index. That fund gained 15% in just the last three months and 38.4% in the last 6 months. The upside down world of money can make real profits in the short term as well as the longer term.
With European governments pouring money into the defence sector (fear of future world war) does it seem likely that growth could continue? If you choose to be more specific about the assets you hold in this fast changing world why would you do it and what are your options?
Why Be More Specific?
Holdings in any type of fund provides diversity (lessening risk),by spreading your money over a wide selection of shares or bonds. Being more specific in what you hold can provide the opportunity of greater growth or even greater protection of your funds. This of course is if the more specific holding interprets the coming economic and background correctly.
What Are Your Options?
Unit trusts and OEICs which you are holding now, provide the relevant safety of diversification. You can specify the type of asset like 'infrastructure say 'index (inflation) linked government bonds or use a mixed asset fund leaving asset allocation to a fund manager.
Exchange traded funds enable a more specific holding often with greater potential risk and reward. The defence fund (+38.4% in 6 months) mentioned above comes as an ETF (Exchange Traded Fund). Of course the higher a fund can rise, the further it can fall.
Individual shares in the sector you choose can be very specific. For this reason our Stockbroker has been asked to provide us with lists of individual shares in both the defence sector, the consumer staples sector. These listings are not in any way a recommendation to invest. Simply a list allowing research. Our stockbroker can be employed to receive advice should you wish.
To explore these options further, best to arrange a 1-2-1 call on Zoom here www.calendly.com/yourfinancialfriend
Trump Beating Strategies
Apart from gold (+6.86%) every asset type commonly held by financial friends has fallen in the last three months. But your choice of strategy from profit taking to the accumulator model and holding of money in money market funds, will have put many of our friends in an enviable position to take advantage of Trumps turmoil. In the coming week I shall write again on this topic of our winning strategies. In every situation and circumstance the markets provide opportunities and they do so right now.
