I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Monday Money, I write about money management.
The U.S. presidential administration continues to destabilize both its own country and the rest of the world. Over the weekend, Trump announced tariffs against eight European countries until an agreement is reached for the U.S. to make a complete purchase of Greenland. Meanwhile, the Pentagon is readying 1500 soldiers to possibly deploy to Minnesota, if Trump decides to invoke the Insurrection Act based on protests and other activity against ICE operations in Minneapolis.
The U.S. stock market is closed today for the Martin Luther King holiday, but futures are down sharply (DJIA F -0.83%, S&P F -1.09%, and NASDAQ F -1.51% as I write this). European stock markets are, not surprisingly, down in open trading right now (Stoxx 600 -1.23%). Asia markets except Shanghai were down overnight. Meanwhile the Euro is up 0.21% and the DXY Index down -0.25% suggesting a flight out of U.S. assets. The U.S. 10 year treasury note was up to 4.227% as of 5 pm EST last night, also showing a move away from U.S. assets.
No longer is the U.S. a safe haven, considering either its sovereign bonds, its dollar currency, or its mega-cap growth stocks, which are showing weakness compared to large cap stocks around the world. Gold and silver are showing strength (Gold +1.80%, Silver +5.23%). Precious metals are becoming the new safe haven as the U.S. is no longer trustworthy. Last April, after Trump’s “Liberation Day” imposing significant tariffs on every country around the world, I wrote an article about why you should invest in gold.
I wrote:
[The] US, once the bastion of economic stability and a reliable safe haven, has started to look and act unreliable. No matter what move Trump and his advisors make next as they negotiate new trade agreements, they’ve made it clear to the rest of the world that you can no longer trust us.
As you certainly already know, the current presidential administration has imposed extreme tariffs on virtually every major economic partner based on a nonsensical formulation of alleged trade unfairness. Whether this is a negotiating tactic or a true shift in ideology doesn’t matter. Markets have reacted with a sharp sell-off in US stocks and bonds, and a weakening dollar. It’s not just a correction. It’s a global reset in how governments (and in laggardly fashion, individual investors) think about where they should store capital.
No one should be surprised at Trump’s latest actions. He showed in his first term that he cared little for agreeements, for sober negotiating, or for treating people and allies with respect and carefulness.
What does all this mean for the individual investor? It means that some things you have taken for granted—the dominance of U.S. large cap equities, bonds especially U.S. treasuries as a ballast and hedge against equity market volatility, and precious metals as inert financially—no longer hold. It means rethinking your investing approach for the next decade, not basing it on the past ten years.
Here are five moves I’m in the process of making:
- Add precious metals. I hold iShares Gold Trust (IAU) and Sprott Physical Platinum & Palladium Trust (SPPP). I am evaluating Averdeen Physical Precious Metals Basket Shares ETF (GLTR) to make a broader precious metals bet.
- Trim U.S. treasuries, especially those of longer. Long-dated U.S. treasuries used to be a good hedge against equity market volatility as institutions and others tended to move to U.S. treasuries in risk-off conditions. This is no longer the case. Now we often see equity markets and the U.S. bond market move in tandem. At some point, expect the U.S. to start doing yield curve control (yolding down yields on longer-term government bonds by buying up those bonds). In that case, treasuries may look attractive again.
- Tilt towards value stocks, both in the U.S. and otherwise. High equity market multiples in growth stocks will likely compress. Pessimism about the global situation will lead investors to look for stocks that are safer and provide immediate cash flow today.
- Reduce all bond positions in your portfolio. Credit markets are likely to deteriorate as investors demand more compensation for taking on risk. This will mean higher credit spreads (the difference for taking on increased risk, such as with high-yield bonds) and lower bond prices.
- Investigate and consider adding liquid alts. Liquid alternatives are mutual funds or ETFs that use complex, hedge fund-like strategies including long/short, managed futures, and global macro to provide diversification and reduced volatility. These funds aim to provide returns that show low correlations with traditional stocks and bonds. These can replace all or a portion of your bond allocation, as a different way to hedge against equity market volatility. Note that some liquid alts will give you exposure to commodities, which often perform well when macroeconomic conditions shift away from those favoring U.S. growth stocks.
Any regime change takes years to play out, so don’t expect that in 2026 to see a radical shift away from U.S. assets. This shift will happen gradually over time. There was some evidence of this beginning last year — Ex-U.S. equities outperformed the S&P 500 in USD terms (32% for the iShares ex U.S. index vs 17.9% for the S&P 500) and the dollar declined by about 7% (giving a boost to ex-U.S. equities).
Some will say that last year’s dollar decline didn’t represent any meaningful change, but what it does represent is a reversal of the trend. The dollar rose 50% over the past 15 years before 2025 and then declined by 7-9% last year. That’s a meaningful change in trend, and combined with the sharp run up in gold and then silver, it suggests that we are at the beginning of a new era.
Last year, there was no forced selling of U.S. Treasuries, no funding crisis, no sharp FX moves. We are in a “slow dollar down regime” similar to the mid-1980s to mid-1990s. After a huge run-up in the early 1980s, the dollar peaked in 1985. Policymakers explicitly sought a gradual dollar decline. The dollar fell 40% over about ten years, not in a single crash. This was coordinated via the Plaza Accord, where major economies agreed to weaken the dollar.
What happened with financial assets around the globe?
- Non-U.S. equities outperformed
- U.S. exporters benefited
- Commodities performed well
- Inflation pressures re-emerged, gradually
- Valuation leadership shifted away from the U.S.
Similarly in the early 2000s, during the post dotcom bubble adjustment, the dollar slowly fell starting in 2002. It fell about 25 to 30% over six years driven by twin deficits (fiscal and current acount), the Fed easing after the dot-com bust, and rising EM competitiveness.
Again during this time, global equities including emerging markets massively outperformed. Commodities entered a secular bull market, as did gold. U.S. equity multiples compressed even as earnings grew, as money flowed to other corners of the world.
A third situation where the dollar moved down over time was in the 1970s post Bretton Woods. This is not as close an analog to today as the 1980s-1990s experience and post dotcom. Inflation was much higher. FX regimes were still being invented. Central banks were less credible.
Post WWII money management was built around the Bretton-Woods system, in which the dollar was convertible to gold and other currencies were pegged to the dollar. That ended with the Nixon Shock, where the U.S. closed the gold window and the dollar became a pure fiat currency. There was no immediate crisis. Markets functioned, but confidence eroded slowly.
The dollar depreciated significantly from the early to late 1970s by perhaps 30% from 1971-72 to 1978. U.S. inflation surged. U.S. equities provided positive nominal returns but poor to disastrous real returns, due to inflation. Bonds had one of their worst decades in history, as yields rose to accommodate inflation. Commodities were a major winner. Oil, industrial metals, and agriculture all surged. Gold was the ultimate winner rising roughly 20x from 1971 to 1980, reflecting a loss of trust in fiat money. Non-U.S. assets did better than U.S. assets in real terms, benefiting from dollar weakness.
You might have heard of the “Mar-a-Lago Accord” — not a real agreement but a floated idea deliberately named to echo the historical Plaza Accord, which led to a dollar decline.
The Plaza Accord of 1985 was a formal coordinated agreement among the U.S., Japan, Germany, France, and the U.K. with the explicit goal of weakening the overvalued dollar. This was intended to improve U.S. competitiveness and provide more balanced world trade.
The Mar-a-Lago Accord is a policy concept and vision in which the Trump administration would attempt to weaken the dollar deliberately via trade pressure, tariffs, and security leverage. We have obviously seen that already, and it seems to be working as intended.
Unlike the Plaza accord, where countries agreed to coordinated action, this “accord” is being undertaken unilaterally. It may result in more volatility than was seen in the mid-1980s to mid-1990s.
Be ready for it, investor!